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Gold Etf's Financial Times Article

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Interesting article in the Lex column in todays FT (23/05/11).

Basically says ETF's are now so big (the biggest ETF owns 2,000 tonnes, equal to a quarter of US reserves) that if gold drops materially out of favour they will be forced to dump the metal on a shrinking market, setting off a vicious downward spiral in the gold price. In other words, "...the virtuous cycle of lowering barriers to entry for gold investing through innovations such as GLD (a major ETF) would work in reverse. The ETF's physical bullion would be dumped on to a market made up of a smaller group of investors, those willing and able to hold physical gold."

Their conclusion was,

"Predicting the top of the gold bubble is foolhardy. It is safer to predict that the bubble's popping will be especially nasty."

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Interesting article in the Lex column in todays FT (23/05/11).

Basically says ETF's are now so big (the biggest ETF owns 2,000 tonnes, equal to a quarter of US reserves) that if gold drops materially out of favour they will be forced to dump the metal on a shrinking market, setting off a vicious downward spiral in the gold price. In other words, "...the virtuous cycle of lowering barriers to entry for gold investing through innovations such as GLD (a major ETF) would work in reverse. The ETF's physical bullion would be dumped on to a market made up of a smaller group of investors, those willing and able to hold physical gold."

Their conclusion was,

"Predicting the top of the gold bubble is foolhardy. It is safer to predict that the bubble's popping will be especially nasty."

First thing I think of when I hear the phrase 'Gold ETF' is 'fractionally created credit notes, whose volume far exceeds the actual real physical gold on the market'. Also, George Soros has just recently liquidated 800 million of his 1 billion gold ETFs. Could this be a sign that George Soros has spotted the peak in the gold market? Or is it more the case that he has decided it to be a good time to get out of the paper gold market?

I am a 'Johnny Come Lately' holder (bought in Dec 2010) of modest amounts of both gold and silver coins and intend to hold onto them until I am either forced to use/sell them or until a too good to miss opportunity could be gained by selling/using them. I am in no doubt whatsoever that within my lifetime (I am 35), there will be a pressing need to have fungible easily exchanged and portable units of wealth at hand. In my ignorance, I was only really alerted to the coming global currency crisis in mid 2010 as more and more information on gold and silver began to surface on the web. Naturally, every bull market peak occurs when the masses come rushing in right at the end and perhaps this phenomena is about to strike again to a certain extent. In the long term however, both gold and silver are set to go parabolic versus currencies because all currencies are ponzi schemes built around the US dollar ponzi shceme and are spiralling way out of control. Any idiot can understand this and someone would have to be totally lacking in any kind of understanding of the world or simple mathematics to think otherwise.

No matter what kind of hefty drop in price that gold takes, in the long run they will outperform all present day currencies simply because all currencies are going to die, or be killed.

I have not read the article, but no doubt it is yet more MSM bull$hit talking down the gold market. Before buying my coins, I done lots and lots of reading and research and there has been bull$hit articles talking down gold and telling everyone the bottom is about to fall out of the market since gold crossed about $500 per ounce.

Edited by Retardstic

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Basically says ETF's are now so big (the biggest ETF owns 2,000 tonnes, equal to a quarter of US reserves)

Does it actually have that 2,000 tonnes in a vault?

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Throughout the 20th century until the 1990's, on average 22-28% of the world's wealth was held in gold, as opposed to property, cash in the bank, bonds, stocks or shares etc.

Since then the ratio of global wealth held in gold has dropped to 1.8%. Even allowing a 100% margin for error, the amount would only be 3.6%.

Now, what does that tell you about inflows and outflows of wealth into gold, yet alone physical gold, when paper gold instruments reportedly dilute the physical market by a factor of 100-1? And what does that tell you of the potential leverage current holders of physical gold will see in their investment WHEN, not if, WHEN the bond markets collapse and their currencies with them?

Retardastic laments that he is a Johnny come lately to gold. Fret not, the party hasn't even started. B)

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With 2000 tonnes of other peoples gold its easy to make money through market manipulation. Short the market to ensure a steep price drop. As the weak hands bail out, buy it all back again. This is how ETF's make money. Those that hold the gold might be upset to find the ETF company actively trying to lower the prices of the assets they hold for them. They can do the same the other way by front-running the market if demand rises.

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First thing I think of when I hear the phrase 'Gold ETF' is 'fractionally created credit notes, whose volume far exceeds the actual real physical gold on the market'.

Then youd be wrong, "physical" commodity ETFs are independently certified to ensure that the backing commodity exists. The securities which back these ETFs have been traded on stock markets the world over for hundreds of years.

Even Bullionvault (whos main compeditor is gold ETF) have this to say ...

"We believe ETFs offer a good service - and a service which is in every way better for gold buyers than gold futures (which are unbacked by gold bullion and thereby subject their holders to unknown risks of default during a crisis). We also understand that convenience, where the buyer has an existing brokerage account, may make ETFs an excellent choice for many investors."

Edited by goldbug9999

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Interesting article in the Lex column in todays FT (23/05/11).

Basically says ETF's are now so big (the biggest ETF owns 2,000 tonnes, equal to a quarter of US reserves) that if gold drops materially out of favour they will be forced to dump the metal on a shrinking market, setting off a vicious downward spiral in the gold price.

In any market increased liquidity brings increased volatility, no real news there.

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Then youd be wrong, "physical" commodity ETFs are independently certified to ensure that the backing commodity exists. The securities which back these ETFs have been traded on stock markets the world over for hundreds of years.

There is information all over the internet that proclaims otherwise. Amongst the more wild theories such as there being 57 times more paper gold than there is physical to back it up, is the simple rule that the Comex does not need to maintain a 1-1 relationship regarding the physical metal in its vault and the number of certificates of 'ownership'. This is not the same as what BV or GM have to abide by (a 1-1 ratio of gold to gold credits).

Instead of taking Bullion Vaults word for it and posting it here as unequivocal proof of the soundness of the ETF market, why don't you go and find out what James Turk (GoldMoney) has to say on ETFs?

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Comex doesn't come into it, physical gold etf providers do have to satisfy a 1:1 backing in order for the security to traded on the exchange (assuming its ETC backed ETF anyway).

Instead of taking Bullion Vaults word for it and posting it here as unequivocal proof of the soundness of the ETF market, why don't you go and find out what James Turk (GoldMoney) has to say on ETFs?

Yes and of course the owner of a service competing directly with ETFs is going to be completely unbiased ... shame he hasnt got the

integrity that the BV owner seems to have.

Edited by goldbug9999

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Then youd be wrong, "physical" commodity ETFs are independently certified to ensure that the backing commodity exists. The securities which back these ETFs have been traded on stock markets the world over for hundreds of years.

Even Bullionvault (whos main compeditor is gold ETF) have this to say ...

"We believe ETFs offer a good service - and a service which is in every way better for gold buyers than gold futures (which are unbacked by gold bullion and thereby subject their holders to unknown risks of default during a crisis). We also understand that convenience, where the buyer has an existing brokerage account, may make ETFs an excellent choice for many investors."

See bold - HAHAHA! I don't believe them. BullionVault and GoldMoney are almost certainly straight as a die with the correct amount of physical gold to back them up. The other ETF's? Don't make me laugh. They are oversold many, many times over with paper unbacked by anything, and almost certainly have also leased out what physical they had. The Comex has been rumoured to force those who wish to take delivery to take FRNs instead of gold and then sign confidentiality papers to keep quiet. If you look on the websites, you will find they can do this, they do not have to deliver physical metal. This is an abuse of the concept of a commodity futures market, whereby I can hedge my future coffee production (for example) to insure against price movements. In the end, I want the coffee.

I gave up reading the FT when it gradually became clear, over the course of many weeks, that they were clearly MSM spouting some form of biased line. I would treat anything they say with great suspicion except for raw data. Most of the bigger ETFs are almost certainly short many, many kilos of their legitimate figures. To conflate them with Goldmoney or Bullionvault is either a mistake or complete stupidity.

Another comparison would be to say that you are saying that the main high street banks are all icons of probity just because you have gone to see Coutts & Co or Adams or any of the other private, exclusive banks. You would be comparing mouldy oranges with golden apples, and I believe this to be the error you are making here.

[Edited for grammar & spelling]

Edited by Old Nis

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See bold - HAHAHA! I don't believe them. BullionVault and GoldMoney are almost certainly straight as a die with the correct amount of physical gold to back them up. The other ETF's? Don't make me laugh. They are oversold many, many times over with paper unbacked by anything, and almost certainly have also leased out what physical they had. The Comex has been rumoured to force those who wish to take delivery to take FRNs instead of gold and then sign confidentiality papers to keep quiet. If you look on the websites, you will find they can do this, they do not have to deliver physical metal. This is an abuse of the concept of a commodity futures market, whereby I can hedge my future coffee production (for example) to insure against price movements. In the end, I want the coffee.

I gave up reading the FT when it gradually became clear, over the course of many weeks, that they were clearly MSM spouting some form of biased line. I would treat anything they say with great suspicion except for raw data. Most of the bigger ETFs are almost certainly short many, many kilos of their legitimate figures. To conflate them with Goldmoney or Bullionvault is either a mistake or complete stupidity.

Another comparison would be to say that you are saying that the main high street banks are all icons of probity just because you have gone to see Coutts & Co or Adams or any of the other private, exclusive banks. You would be comparing mouldy oranges with golden apples, and I believe this to be the error you are making here.

[Edited for grammar & spelling]

SHUT UP AND....

you-write-as-youre-told.jpg

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SHUT UP AND....

you-write-as-youre-told.jpg

Nice. Very nice.

Exactly what I think when I see most MSM articles in the papers about gold. I don't think they care too much about silver, except to bash it now and again to frighten the "Weak Hands" out of the market.

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Throughout the 20th century until the 1990's, on average 22-28% of the world's wealth was held in gold, as opposed to property, cash in the bank, bonds, stocks or shares etc.

Since then the ratio of global wealth held in gold has dropped to 1.8%. Even allowing a 100% margin for error, the amount would only be 3.6%.

Now, what does that tell you about inflows and outflows of wealth into gold, yet alone physical gold, when paper gold instruments reportedly dilute the physical market by a factor of 100-1? And what does that tell you of the potential leverage current holders of physical gold will see in their investment WHEN, not if, WHEN the bond markets collapse and their currencies with them?

Retardastic laments that he is a Johnny come lately to gold. Fret not, the party hasn't even started. B)

If you look at the amount of wealth in for example China now compared to for example 30 years ago, it genuinely has increased, whereas the amount of gold hasn't really gone up. There is no particular reason why gold should go up to match all the new factories, power stations, shopping centres and so on that have been built in the last few years.

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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