Gold and Silver Juniors, Mid-tiers and Producers Message Board

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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers

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To: aknahow who wrote (56787)	2/24/2008 1:01:44 PM
From: The Vet	Read Replies (1) of 78416

Hi George, I agree that there is no conspiracy from GLD or their management but I do believe we are seeing the signs of a weakness in the GLD ETF structure that I have always been concerned about. That weakness is the ability to sell stock short in GLD and other ETF stocks where shares are backed directly by an actual metal or commodity and there is the ability to create unlimited additional stock thus minimising the possiblity of a short squeeze. Each share sold short effectively dilutes the backing of each existing share issued and large scale short selling fills demand by new buyers without a corresponding increase in the metal in the vaults. Ultimately it could lead to a "run on the bank" as GLD shareholders cash out their stock and the authorised participants redeem all the gold leaving the long shareholders who were slow to the wicket with completely unbacked stock the only value of which would be what they could convince the shorts to cover for.. Close to zero I figure! We have had a lively discussion on this over on the Gold and Gold Stock board. It starts at.. Message 24338929

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