Monday, November 29, 2010

A Teaser Tweet from the Ex-Gold Hater

He thumbs:
This is going to be weird... gold bugs are going to really like the Chart Of The Day that I'm working on right now.

1 comment:

  1. "If anyone has any empirical evidence that the ETF has created a big distortion in the market -- rather than just conjecture -- we'd love to hear it."

    I'll give it a start:
    On November 29, 2004, GLD closed at $45.40. Not everybody in the world who wanted gold had $45.40 plus commission to buy one share, but most investors who had brokerage accounts could scratch up enough for the minimum entry.

    On the New York Comex, the minimum gold contract size is 100 ounces. Almost nobody had $45,400 plus commission to buy the minimum entry. Maybe they would have let you in for $3,000 IIRC, but almost everyone who leverages futures ends up losing their position.

    The demand of the great unwashed for the GLD ETF at prices one-thousandth of a fully paid-up futures contract easily stimulated volume more than 1,000 times, and quickly made GLD the preferred gold market investment. No storage, no extra trips, just a couple of clicks, and you're in the gold market.

    Is this not evidence for the goldhater? Am I wrong because I'm not including a graph?