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Gold/Mining/Energy : Gold & Gold Stock Analysis -- Ignore unavailable to you. Want to Upgrade?

To: tyc:> who wrote (12170)	2/24/2008 11:03:10 AM
From: Tommaso	Respond to of 29622

>>>IMHO it is hazardous to the shorter).<<< Exactly. No broker is going to allow any customer to maintain a short position without adequate margin that can be seized or sold to cover losses. Even a hedge fund would (as various commodity hedge funds already have) have to suspend redemptions, declare bankruptcy, and leave its customers with total (or near-total) losses. Individual investors would find that their brokers covered their short positions whether they wanted that done or not, as soon as their losses reached a certain level. The idea that shorting GLD is a magical source of free cash for certain insiders is absurd. The "created" shares from short selling are backed by other assets. They are not really shares in GLD, but rather certificates guaranteed from other forms of wealth. Selling GLD short is a gamble that the value of the actual gold backing the shares will decline. The "creation" of shares by short selling is nothing in comparison with the "creation" of crude oil or natural gas in the futures markets for those commodities.