Return to Answer

Update - There's a fellow Adrian Douglas who refers to the gold market as being a fractional reserve market. He references the trading on LBMA (The London Bullion Market Association) and concludes that more gold is owned than actually exists. What I don't see is how he accounts for the same ounce being traded frequently. Of course the trading will multiply up to a huge number of ounces, but after a month of buying and selling, a trader may own nothing, yet have buy/sells totaling tens of thousands of ounces. I am open minded, really. I just don't see the specifics to back his claims, that people believe they own 30 times the gold that exists. A futures contract doesn't count as I would sell it before taking delivery, this is the way futures contracts have always worked. A lot of trading, little delivered commodities in comparison.

All public available information indicates the two ETFs you mention are 1:1, no leverage. GLD is priced as 1/10 oz of gold, so 10 shares is one ounce, as will move as one ounce of Gold, no leverage. 100 to 1? How would that work? A 1% drop would wipe the ETF out?

By the way, I'd ask that you provide a link or two to the sites you cite. Are they mainstream, or 'conspiracy theory' sites? Additional note, I expect to read somewhat literate articles, not YouTube videos that never get to the point even after 5 minutes. Last, I dismiss any article whose title is "Gold going to $57,000." Do you know how much gold is in the world? Right, 5.3 billion oz. Can you multiply 5.3B by $57K? $302Trillion. Do you know what the wealth of every person on the planet adds up to? I'll give you a hint. Less.

Update - It occurs to me you might be asking if the ETF holds not gold, but derivatives. Uh, nope. See the GLD quote on Yahoo. It describes this, and 'holdings' indicates 100% physical metal.

Update - Ray - Admittedly there's a train wreck aspect to this, tough to ignore some of the crazily titled videos. JP Morgan Class Action Suit will lead to silver explosion! on one hand, the speaker Bob Chapman, references something I can imagine being true, a certain amount of manipulation, which can occur in stocks the same as the metal ETFs. Yes, it sounds like conspiracy theory, but where there's a dollar to be made I know these things can happen. But, he makes the same reference, that, while recommending physical metal, uses the line "the ETF will rise 10 times as fast." This makes no sense at any level.

Here's the confusion (if you know this, then it's for others, I don't know your background) - When dealing in the futures market, as a buyer you don't own anything most of the time. A standard gold contract is 100 oz, so current value is about $180,000, with a margin requirement of $9,450. This isn't a typo. You can 'bet' on rising gold prices by putting 5% into an account. This raises new and troubling questions. First, the margin requirement can be changed removing some of this leverage, but also requiring contract holders to potentially sell even though they are in a positive profit position. More so, the amount of gold represented by the total contracts outstanding is far more than anyone can deliver. Most of these contracts settle for cash, but as the expiration nears, the broker would call and advise that you must sell the contract or prepare to put up the full amount and take your 100oz gold bar. If too many contact holders look to take delivery, you'd see a wild distortion in the market, i.e. a price spike, and then some activity shortly after. The answer about the EFT, and Duff's link to the GLD prospectus) covers one aspect of your question, but this doesn't remove the potential for manipulation or other misdeeds.

All public available information indicates the two ETFs you mention are 1:1, no leverage. GLD is priced as 1/10 oz of gold, so 10 shares is one ounce, as will move as one ounce of Gold, no leverage. 100 to 1? How would that work? A 1% drop would wipe the ETF out?

By the way, I'd ask that you provide a link or two to the sites you cite. Are they mainstream, or 'conspiracy theory' sites? Additional note, I expect to read somewhat literate articles, not YouTube videos that never get to the point even after 5 minutes. Last, I dismiss any article whose title is "Gold going to $57,000." Do you know how much gold is in the world? Right, 5.3 billion oz. Can you multiply 5.3B by $57K? $302Trillion. Do you know what the wealth of every person on the planet adds up to? I'll give you a hint. Less.

Update - It occurs to me you might be asking if the ETF holds not gold, but derivatives. Uh, nope. See the GLD quote on Yahoo. It describes this, and 'holdings' indicates 100% physical metal.

Update - Ray - Admittedly there's a train wreck aspect to this, tough to ignore some of the crazily titled videos. JP Morgan Class Action Suit will lead to silver explosion! on one hand, the speaker Bob Chapman, references something I can imagine being true, a certain amount of manipulation, which can occur in stocks the same as the metal ETFs. Yes, it sounds like conspiracy theory, but where there's a dollar to be made I know these things can happen. But, he makes the same reference, that, while recommending physical metal, uses the line "the ETF will rise 10 times as fast." This makes no sense at any level.

Here's the confusion (if you know this, then it's for others, I don't know your background) - When dealing in the futures market, as a buyer you don't own anything most of the time. A standard gold contract is 100 oz, so current value is about $180,000, with a margin requirement of $9,450. This isn't a typo. You can 'bet' on rising gold prices by putting 5% into an account. This raises new and troubling questions. First, the margin requirement can be changed removing some of this leverage, but also requiring contract holders to potentially sell even though they are in a positive profit position. More so, the amount of gold represented by the total contracts outstanding is far more than anyone can deliver. Most of these contracts settle for cash, but as the expiration nears, the broker would call and advise that you must sell the contract or prepare to put up the full amount and take your 100oz gold bar. If too many contact holders look to take delivery, you'd see a wild distortion in the market, i.e. a price spike, and then some activity shortly after. The answer about the ETF, and Duff's link to the GLD prospectus) covers one aspect of your question, but this doesn't remove the potential for manipulation or other misdeeds.

All public available information indicates the two ETFs you mention are 1:1, no leverage. GLD is priced as 1/10 oz of gold, so 10 shares is one ounce, as will move as one ounce of Gold, no leverage. 100 to 1? How would that work? A 1% drop would wipe the ETF out?

By the way, I'd ask that you provide a link or two to the sites you cite. Are they mainstream, or 'conspiracy theory' sites? Additional note, I expect to read somewhat literate articles, not YouTube videos that never get to the point even after 5 minutes. Last, I dismiss any article whose title is "Gold going to $57,000." Do you know how much gold is in the world? Right, 5.3 billion oz. Can you multiply 5.3B by $57K? $302Trillion. Do you know what the wealth of every person on the planet adds up to? I'll give you a hint. Less.

Update - It occurs to me you might be asking if the ETF holds not gold, but derivatives. Uh, nope. See the GLD quote on Yahoo. It describes this, and 'holdings' indicates 100% physical metal.

All public available information indicates the two ETFs you mention are 1:1, no leverage. GLD is priced as 1/10 oz of gold, so 10 shares is one ounce, as will move as one ounce of Gold, no leverage. 100 to 1? How would that work? A 1% drop would wipe the ETF out?

By the way, I'd ask that you provide a link or two to the sites you cite. Are they mainstream, or 'conspiracy theory' sites? Additional note, I expect to read somewhat literate articles, not YouTube videos that never get to the point even after 5 minutes. Last, I dismiss any article whose title is "Gold going to $57,000." Do you know how much gold is in the world? Right, 5.3 billion oz. Can you multiply 5.3B by $57K? $302Trillion. Do you know what the wealth of every person on the planet adds up to? I'll give you a hint. Less.

Update - It occurs to me you might be asking if the ETF holds not gold, but derivatives. Uh, nope. See the GLD quote on Yahoo. It describes this, and 'holdings' indicates 100% physical metal.

Update - Ray - Admittedly there's a train wreck aspect to this, tough to ignore some of the crazily titled videos. JP Morgan Class Action Suit will lead to silver explosion! on one hand, the speaker Bob Chapman, references something I can imagine being true, a certain amount of manipulation, which can occur in stocks the same as the metal ETFs. Yes, it sounds like conspiracy theory, but where there's a dollar to be made I know these things can happen. But, he makes the same reference, that, while recommending physical metal, uses the line "the ETF will rise 10 times as fast." This makes no sense at any level.

Here's the confusion (if you know this, then it's for others, I don't know your background) - When dealing in the futures market, as a buyer you don't own anything most of the time. A standard gold contract is 100 oz, so current value is about $180,000, with a margin requirement of $9,450. This isn't a typo. You can 'bet' on rising gold prices by putting 5% into an account. This raises new and troubling questions. First, the margin requirement can be changed removing some of this leverage, but also requiring contract holders to potentially sell even though they are in a positive profit position. More so, the amount of gold represented by the total contracts outstanding is far more than anyone can deliver. Most of these contracts settle for cash, but as the expiration nears, the broker would call and advise that you must sell the contract or prepare to put up the full amount and take your 100oz gold bar. If too many contact holders look to take delivery, you'd see a wild distortion in the market, i.e. a price spike, and then some activity shortly after. The answer about the EFT, and Duff's link to the GLD prospectus) covers one aspect of your question, but this doesn't remove the potential for manipulation or other misdeeds.