Resource Stock Report - V14 #12.1 - Naked Shorting Gold Stocks , December 15, 2008

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                   Naked Shorting July through September

The SEC did release the naked short data for the 3rd qtr., you can go and see for yourself.

http://www.failstodeliver.com/

What I found was just sickening. Many of our stocks and I would assume many others are heavily
manipulated with naked short selling. All the press and noise from the SEC on naked shorting was
just a pile of crap. In fact the problem got worse. I am convinced the SEC will do nothing about it.
This is nothing but corruption and lack of regulation. There is no sense having rules if they are
disregarded and nothing is done about it.

I have no doubt our portfolios have been robbed through a corrupt and manipulated stock market. No wonder the fundamentals and technicals make no sense anymore!!!!!!!!!!!

I don't know if there is anything we can do about the problem, unless a legal firm would take a
class action suit against the SEC on behalf of small investors. I would urge U.S. investors to write
their congressmen, perhaps the new administration will do something, apparently Obama's
administration is going to replace the head of the SEC.

There is one thing I am going to do and that is recommend very few U.S. traded stocks for now. I
will also suggest to any Canadian listed companies not to seek U.S. listings.

Just as I suspected there was not a naked short problem with the financial stocks in July when the
SEC and Fed claimed that was a problem. Again, this was just a smoke screen for their market
intervention and manipulation. I listed the so called 19 financial stocks that had the problem with
comments on each about the naked shorting, you can check the SEC data for yourself at the above web
site. What I did notice though was a spike in naked shorting on some of the financials in September.

When you look at these naked short positions, keep in mind that most of these stocks have billions
of shares outstanding and trade hundreds of millions of shares a day. The total reported short
interest on the list of banned financials was a mere 4% of their float. The number of naked shorts
was insignificant and I suspect because it is very easy to locate and borrow stock to sell short
with these very liquid stocks.

The biggest problem and manipulation on gold stocks on our list occurred with Paramount and Exeter. Both stocks seen big spikes to about 300,000 shares each in naked shorting in late August early September hammering both stocks down by 50%. Paramount from about $1.00 to $0.50 and Exeter from $4 to $1.60.

These are the biggest manipulations because the amount of naked shorting is very significant
compared to average trading volume. Paramount was only trading about 45,000 shares/day and Exter
about 95,000/day.

Yamana also seen a big spike in September naked shorting to about 4 million shares driving it down to the September low. Couer D'Alene seen a spike to 4 million at the same time driving it down.

Once again, there was far more naked shorting with the gold stocks than the financials.

Our oil stocks hammered too!!

I did not check our oil&gas stocks before as we only had 4 U.S. listed ones, but I checked the naked
shorting on these and just felt like puking more. California Oil and Gas, COGC seen heavy naked
shorting up to 1 million shares in September driving it down to $0.03 cents. Voyager, VYOG was
heavily naked shorted up to 1.5 million shares last October/November destroying that stock. Delta
Petroleum, DPTR was not as bad with spikes up to 800,000 in the past year but always around big
price movements in the stock. Ultra Petroleum only seen spikes up to around 200,000.

The other thing that really points to a lot more corruption is short interest reporting. I was
watching the short interest on Paramount every week and it remained constant at around 60,000
shares. How can all this naked shorting occur and the reported short interest never change. It is
obvious manipulation by those that know how to get around the reporting system or the short
reporting mechanism is faulty or incompetent.

It is possible that manipulators use the naked shorting to drive the stock down and cover fairly
quickly before the short interest gets reported. The short interest could be moved between
manipulators so its shows as settled with the first short, buying more time to cover the position
and avoid short reports.

Now here is some more bizarre corruption. There was big spikes in naked shorting of Freddie Mae
(19M) and Lehman brothers (49M) in September. I can understand Lehman because it went under so final
trades could have been delayed settling. But why the big spike in naked shorting with Freddie Mae
when it was driven down from $5.00 to $0.50? This happened when there was a supposed ban on naked
shorting on this stock and 18 others and just before the SEC banned shorting altogether on a large
number of stocks. CitiGroup also seen a spike to 5 million  naked shorts in September. But both
CitiGroup and Freddie Mae trade 300 or so million shares a day so even these spikes in naked shorts
are not very significant. However the ban on naked shorting was disregarded.

There is one thing for certain, the U.S. stock market is corrupt and being manipulated. I have lost
all faith in U.S. markets and so have a lot of investors. I seldom listen to Cramer's Mad Money
show, but I had a look at this video of a recent show, it is a must see!!!!!!!!!!!

http://www.cnbc.com/id/28179214

Cramer nails it right on with the manipulation and corruption in the stock market.

                                      Gold and Silver

I might also make comment on manipulation in gold and silver. The short position has become more
concentrated, just 3 investment banks account for 67% of the short position in gold and only 2 banks
for 98% of the short interest in silver. Some of this could be due to merger activity with U.S.
banks but it might also be a positive signal. The US$ has to fall and there is more and more noise
of a short squeeze in Comex gold this month and more talk about the Fed depreciating the dollar
against gold. Of course short positions would lose a lot of money if this happened.

The short positions might have been moved to banks that are prepared to take these losses. Remember these shorts could also be hedging their positions by shorting the US$ and going long gold stocks for example. Because they cannot cover such a large short position without moving the market much
higher against there position. But then again, gold and silver have been on the rise in the past
couple weeks.

Some more detail on concentrated shorts at this link

http://www.resourceinvestor.com/pebble.asp?relid=48524

And a very good article by Turk on backwardation and the pressure on the physical gold market that
could force a squeeze

http://www.kitco.com/ind/Turk/turk_dec122008.html

                               **************************************************

Some background information and articles worth reviewing

Oct 4: The US Securities and Exchange Commission said on Friday it would lift its temporary order
banning short selling of financial shares next Thursday. The SEC said it took the action after the
enactment of a $700 billion financial rescue package aimed at stabilizing fragile markets.

“The commission’s emergency order that prohibits persons from selling short the securities of
financial institutions will expire on Oct 8,” the statement said.

On Sept 19, the SEC said it took the action in concert with its British counterpart, the Financial
Services Authority, which announced a wider ban on short sales.

The move covered 799 financial institutions

Remember this Sept 17th quote "These several actions today make it crystal clear that the SEC has
zero tolerance for abusive naked short selling," said SEC Chairman Christopher Cox.

What a joke!!!!!!!!!

SEC's short-selling ban isn't giving investors a brake

http://www.marketwatch.com/news/story/short-selling-ban-working-not-really/story.aspx?guid=%7B5735EA2F-12A2-4631-8C35-F7D520C08683%7D&dist=TQP_Mod_mktwN

Remember, short interest as a percentage of all shares was about 4% without the ban. So, again,
little if any effect.

How the ban on short selling did more harm then good and as I have always maintained they should
just re-instated the 'uptick' rule
http://www.nakedcapitalism.com/2008/09/ban-on-short-selling-will-hurt-rather.html

Naked shorts - Gold stocks July through September

Kinross KGC - one spike early July of 600,000 to cap price rise
Goldcorp GG -several small spikes of 200,000 to 300,000
Goldfields GFI - one spike to 500,000 in late September to cap price rise
Barrick ABX - 400k to 700,000 naked over a few weeks in July on price decline
Newmont NEM - couple spikes to around 500,000 in August And Sept.
Cameco CCJ - not much activity
Agnico Eagle AEM - small move to around 200,000

Yamana AUY - Big spike to 4 million driving down to September low
IMG Gold IAG - little activity
Coeur D'Alene CDE -  spike to 6 million driving down to September low
Hecla HL - consistent naked shorting of 1 to 2 million shares from
July through to September as stock declined from $10 to $4

Claude CGR very little, no big spikes as earlier
Exter XRA - heavy naked shorting in Aug/Spet. to 300,000 driving
price down from $4.00 to $1.60 (volume 90k to 100k/day)
Great Basin GBN - a lot less activity
Paramount PZG - big spike to 312,000 in Late August early September
driving price down $1.00 to $0.50 (volume around 40k to 50k/day)
Tanzanian Royalty TRE - some spikes to 350,000 on price decline from
$4.00 to $2.00
Platinum Group PLG - little activity
Mag Silver MVG -increased activity but still small, around 50,000 shares
naked all of July
Kimber KBX - lot less activity
Tara Gold TRGD - lot less activity

Fannie and Freddie, very little except
Freddie Mae, FRE spike in September to 19 million
Lehman LEH - nothing until spike in September to 49 million
Merrill MER spike in September to 1 million
Morgan Stanley - MS small spike in September to 1 million
Goldman Sachs - GS little activity
Allianz Aktiengesellschaft (AZ) very little
Bank Of America Corp (BAC) 1 to 2 million in August/Sept
Barclays PLC (BCS) very little around 200,000
BNP Paribas (BNPQY.PK) nothing
Citigroup Inc (C) spike in September to 5 million
Credit Suisse Group (CS) very little
Daiwa Securities Group Inc (DSECY), - very little
Deutsche Bank Group AG (DB), very little
HSBC Holdings plc (HBC), very little
JPMorgan Chase & Co. (JPM), verylittle
Mizuho Financial Gp Adr (MFG) - pretty much nothing
Royal Bank of Scotland (RBS), very little
UBS AG (UBS).very little, one spike to 1 million

                  More Corruption and SEC incompetence

Apparently these scam was taking new investors money to pay the high returns to previous investors.
When money stopped flowing in with the credit crisis, the music stopped and there was no chairs.

High-net-worth and pension-fund investors are expected to launch a rash of investor lawsuits on the
federal and state levels against Bernard L. Madoff Investment Securities LLC, whose founder was
arrested and charged with securities fraud in what federal prosecutors are calling a Ponzi scheme
that could involve losses of more than $50 billion.

 According to an SEC filing from January 2008, Madoff has been registered as an investment adviser
 with the SEC, granting the agency access to his books and records. Despite that access, Peter
 Schiff, president of Euro Pacific Capital in New York, also raised concerns about the SEC's
 auditing of the firm.

"Of course, the fact that the SEC routinely audited Madoff's investment company and found nothing
wrong is further proof that government regulation of the securities industry is ineffective and has
done more harm than good," he said. "Rather than protecting investors, it merely lulls them into a
falls sense of confidence. If government stayed out, private-sector due diligence would do a much
better job of ferreting out such massive and poorly conceived scams."

Previously Bernard Madoff was chairman of the Nasdaq Stock Exchange, maybe they don't investigate their own?

(c) Copyright 2008, Struther's Resource Stock Report

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