Saturday, October 10, 2009
Gold isn't flowing into ETFs (holding fund, you put money in and they hold gold, more money in, more gold in) anymore, and you could infer from this article that the tide is literally on the turn. According to ftalphaville(link in a comment), courtesy of Bedlam Asset management, quite a few ETFs generally have used leverage to generate stronger returns, and should one of them pop when prices go against them, the lack of transparency in ETFs generally will lead to a run, which will in turn lead to a large amount of whatever commodity the ETF deals with flooding onto the market tsunami style. So if you are a deflationista wondering why gold hasn't collapsed (i.e. why you are wrong), then look in the news for an ETF failure as price collapse trigger, or deleveraging induced deflation.