Can you sell a house you don't own (or have the rights to sell)
Can a person sell a company's shares they do not own?
Of course not
Naked short selling means that people are selling something they do not have the right to sell. They did not borrow and do not own the gold that they are short selling. The people who purchase the gold represented by the naked short sell, are in fact purchasing nothing of value, it never existed. The effect of this is to push down the price of gold, negatively effecting legit investors