Posted on 05/22/2013 12:41:32 PM PDT by Kaslin
Investors in the Gold ETF - GLD liquidated 300 tons of the metal this year.
The reason? People are tired of losing money watching gold sink while the S&P soars.
Tom Lydon, the editor of ETF Trends, says the disposal of over 600,000 pounds of gold so far this year "amazing" and "incredible." Click on above link for a video interview with Lydon.
Gold vs. S&P 500
Reflections on Momentum Trading
Since late 2012 the S&P 500 has been on a nonstop rise, while gold has gone the other way. People have thrown in the towel on gold in favor of momentum trading in stocks.
It seems nearly everyone is a momentum trader now, one of the consequences of inept central bank bubble-blowing policy.
Louise Yamada says it's Time for Gold Bulls to Abandon Hope. See my response in Wild Swings in Gold and Silver; Time to Give Up Hope?
ETFs no more hold physical gold than banks hold the physical cash of their depositors. Sure, if you go down and exchange your ETF individually you can get your gold, but if a lot of people decided to get physical they'd find out they were holding nothing but an empty bag of unkept promises.
http://seekingalpha.com/article/1362291-the-end-of-fractional-reserve-gold-is-nigh
Investors in the Gold ETF - GLD liquidated 300 tons of the metal this year.
The above sentence was from the original post. As far as I know, GLD holds enough gold to redeem every share.
It doesn't. Every share of GLD can be sold twice, long and short, so... twice as many shares as there is of the physical that is supposed to be backing it.
If you sell it short, you have to borrow it. The person you borrow from can't redeem it until you return his shares.
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