Naked shorts are not really as big an issue as JP says they are. They are certainly not the main reason for the malaise in the juniors. The main reason is risk aversion caused by a fear in markets over all. Funds are not buying juniors. Funds and large investment managers have chosen to hold more cash than usual and that cash has come from the sale of what they consider higher risk investments, such as junior gold stocks always known to be in the high risk category.

I find this whole blame the naked short thing comical at best but mostly just frustrating and irritating. It's comical because people toss around the term, use it as a scapegoat but haven't a clue about what they're talking about. Frustrating because it's not true.

It's irritating because they falsly accuse Canada of all kinds of horrors related to naked shorting, while it composes such a tiny wee bit of trading such that it's insignificant, while shorting is much more prevalant in the US. Shorting or Naked shorting have the same affect on a stock and there is no advantage or reason for naked shorting as long as shares are available to borrow, which they almost always are.

The main reason someone would short "naked" as opposed to just the plain old fashioned way is because they couldn't find enough shares to short from brokers (who btw, are compensated for lending your shares out for shorting so they're only too happy to do so). There are lot's of TDC shares available. Same with almost all junior resource stocks. These are not stocks with just a small float. There's over a hundred million shares of TDC on the free market. If someone wants to short they don't need to go the naked route and that is the same for almost all of these companies.

Yet, there is consistently only 40 or 50 thousand shares reported short for TDC. Sometimes less, sometimes a little more. Shorting has nothing to do with TDC's shareprice. Fear and lack of interest in juniors and in TDC is the reason.

I have to add that one might think there would be some advantage to having a large amount of shorts reported as it would further scare off investors.

Are there occasions when naked shorting is to blame for share price action? Absolutely. But you can almost see it happening. It begets large waves of downward pressure on a stock at key moments. Yet we don't see this with Tyhee or most stocks right now. We simply see volume drying up and a lack of willing buyers.

Here is an article from a Canadian newspaper which investigated the issue of naked shorting in Canada:

The study found no evidence of excessive or prolonged "fails" on Canadian marketplaces. Only 0.27% of trades by study participants failed to settle. The predominant cause of failed trades was administrative delay or error accounting for almost 51% of "fails"; less than 6% of fails resulting from the sale of a security involved short sales; fails involving short sales are projected to account for only 0.07% of total short sales; the more "junior" the marketplace in terms of the type of security traded, the higher the incidence of failed trades; special settlement trades experienced a significantly higher rate of failure; and, approximately 88% of failed trades settled within five days after the "expected" settlement date, with 98% settling within 15 days after the "expected" settlement date.