Sorry, this time we do not agree. There have been no additions to the gold held at GLD since Jan 31. So yes you are correct about this fact. But on 6 of the trading days shares were at a closing discount to the physical gold behind each share. Meaning on those six days if anything had happened it would have more likely been selling of gold to buy shares, by the authorized participants. But because the discount was too small or did not permit making a sufficient profit by selling gold and buying shares this was not done.
Only 3 trading days showed shares trading at a premium which might have caused shares to be sold and gold delivered to cover the shares sold short. But I use the word might because even on those three days the premium was not very big.
As explained on another post, there are some very logical sound reasons why the premium to physical diminished as gold hits new high. Supply and demand is at work but at another level. If gold is at a new high, I may continue to buy physical but become more concerned about the spread paid to buy the gold. I did not mind paying 6% to sell a $45,000 house, but balk at paying 6% to sell a $1,000,000 house. Could be the same house, if it was in California, and 40 years later.
Same concept applies when buying fold coins. The spread one paid when gold was $250 an oz. is less acceptable for most when gold is above $900.
Also as the amount of GLD shares and volume increases, there is less opportunity for participants to make money as premiums and discounts narrow with increased activity as they do on any stock.
I know that this is a pedantic post.
I fault Statestreet Investors for not taking a more aggressive line with those analyst that make incorrect or even false statements. Proactive is a better choice of words than aggressive.
On a personal level, I am more bullish on gold knowing that the run up, since Jan. 31, has not been driven by any additions to physical at GLD. When additional bullishness once again causes GLD to sell at sufficient premium new additions will be made. |
