Naked short selling occurs when an entity sells shares that do not exist. Since these counterfeit shares only exist as digits in a computer, they will fail to deliver (FTD) into the account of party who purchased them. The NYSE reports all FTD's that persist for a period of 5 days or longer here: http://www.nyse.com/regulation/nysearca/Threshold_Arca_Securities.shtml?date=20120131 If you check back through the archives you will find that SLV has never appeared on that list. In other words all shares of SLV that are being sold on the market are official fully backed shares as issued by the SLV trust. Valid shares have been delivered to all who have purchased them.
Now on the other hand, if you look at the linked site above and go to the records starting on 1/11/12, you will see that some criminal element must have gotten inside word that PSLV was going to announce that they were going to do a secondary offering, as on that date PSLV first appears on the Reg SHO Threshold List as a stock that is being sold naked short. Someone counterfeited a pile of PSLV shares and sold them at the sky high premium. After the announcement was made and the premium crashed, the criminal element apparently covered the naked short position and on 1/19/12 PSLV fell off the list. Of course the SEC will do nothing to go after the criminals in this case and you will never see anything in the mainstream media about this theft.
The current SLV short position is from SLV holders who purposefully/voluntarily dispose of their shares by lending them into the market for resale. Its almost like you're saying that if I sell my SLV shares, then SLV is "missing silver" that I once owned. When you lend out your shares you are making a PAPER deal with the borrower. You have then become an unsecured creditor of the party who borrowed your shares. This transaction is solely between you and the borrower. The shares that have been transferred (lent) have been sold to a third party. That third party is the new owner of those shares and the shares in question are still fully backed by the physical silver in the vault which they represent. The SLV trust owes nothing to the first two parties in this transaction. No silver is "missing" or "borrowed" from the trust. No counterfeit shares have been created. The party who lent the shares no longer has SLV shares in his/her account - the shares are gone! They have been transferred to the new owner. In it's place is a paper IOU with the party who borrowed the shares. The SLV trust could care less what kind of side bets people place on the movements of the SLV share price or in other words betting on the price movements of silver. For some strange ill conceived reason the conspiracy folks seem to think that any bet placed on the SLV share price means that SLV is missing silver.