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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: ild who wrote (52572)2/3/2006 6:15:48 PM
From: aknahow  Read Replies (1) of 110194
 
Since I can't determine the premium, until announced, it makes trying to figure out how to use the concept that premiums lead to deliveries, mute.

True demand for gold leads for demand for shares, thus when new shares are obtained due to a delivery of physical gold one could surmise that unless the issue of new shares results in a discount on existing shares, demand for gold remains strong.

Sure others go there and say if the spot price of gold is going up then, it is obvious demand is strong. But what bothers me about just using the pog, is the inability to determine volume.

With GLD data one might be getting a bit more information. If no discount is generated by the issue of new shares and the GLD share price continues to trade at a small premium, one knows that should it trade at a 10 basis point premium then participant b/d are going to buy or transfer physical gold into the GLD ETF.

Bottom line is that should GLD begin trading at a discount, even a small one on a consistent basis I might begin to believe gold was going to get weaker or continue going lower.

If, for example, after today it continues to trade at a small premium, I will believe that the pog should continue going up.
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