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Gold/Mining/Energy : Gold & Gold Stock Analysis

GLD 386.47

-0.2%

Dec 5 4:00 PM EST

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To: aknahow who wrote (12192)	2/24/2008 3:19:34 PM
From: The Vet	Read Replies (1) of 29622

George, an equally valid conclusion is that short sellers are pitching their sell orders at a mid point close to the actual true value of GLD stock when compared to the POG and thus not allowing the authorised participants any profit in their operations. In such a case there could be significant buying pressure from new shareholders but because none of the stock was supplied by APs no additional gold would be added. The total supply of stock would come from short sales or resales. Shorts could sell right down to the lower limit of profitability of the APs and completely cut the AP's out of the equation, which would leave the gold holdings static. It's not a hard calculation to work out the price range the shorts would sell into knowing the POG at all times and the margins the APs need to operate. Strangely enough if GLD does start to increase more than the shorts can manage to control they just have to sit back and let the AP's do their thing increasing the number of shares issued the proper way and thereby avoiding a short squeeze. It's a neat safety valve for the shorts in GLD which isn't available when shorting other stocks.

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