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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: aknahow who wrote (73457)	11/2/2006 3:03:37 AM
From: The Vet	Read Replies (1) \| Respond to of 110194

George on GLD ETF you suggested "When we see the premium on the shares it may indicate that selling short shares by participants and delivering gold to receive new shares and cover the shares shorted, was a no brainer." I have been watching how GLD trades and I believe that you are very close to the mark. The "authorised participants" seem to sell GLD stock into the market as the POG drops and then take their profits by closing out the shorts at even lower prices. They simply follow the trend. If the price turns up suddenly they have the option of covering with actual metal and getting new shares which automatically covers the short position. However the fact that it happened on the 1st of the month is interesting as that is more likely to be the result of a fund balancing the books rather than a gold trader who normally works on futures notice, expiry and delivery dates.