aknahow

What's Up with Gold Inventories?

Management of G:D makes no buy or sell decisions. Unventories of gold going up or down depends on the premium or discount of GLD shares to gold.

If there is sufficient premium, authorized participants sell short shares, deliver gold and get new ly issued shares with which to cover their shorts.

If shares sell at a discount the authorized participants short gold, deliver shares in return for their book value in gold which they use to cover their gold shorts.

Gold ETF Adds 36.5 Tonnes to Inventory On Rise in Demand

tim, you can contact State Street Investors and the managers of the fund or read the prospectus again with great care.

When you say, ". As part of the process, instead of going out and buying stock to be placed in the fund, gold bullion is purchased and placed in the trust.", logic would demonstrate that buying shares in the market would not add to the amount of shares outstanding. The ETF must issue new shares. It must have gold backing behind the shares issued. So a delivery of physical must take place first. The authorized participants don[t deliver physical and take shares because they ar good guys. They deliver to get new shares to cover the shares they sold short. They only sell short GLD shares when they are at a premium to their gold backing.

Gold ETF Adds 36.5 Tonnes to Inventory On Rise in Demand

Demand for shares is not 100% correct, as an explanation for the addition of physical gold.

Only when shares sell at a sufficient premium to the value of physical gold behind each share, will new deposits of gold be made.

And the process involves not creating new shares but selling short the shares which are at a premium to gold, buying gold with the proceeds and depositing the gold in the ETF to obtain newly issued shares.

"As is the case for stock funds, when there is more demand for shares than currently exist, the fund must create new shares. As part of the process, instead of going out and buying stock to be placed in the fund, gold bullion is purchased and placed in the trust."

More demand for shares should or could cause the shares to sell at a premium. Thus in part what you wrote is true. The rest however is not really accurate or up to your usual standard.

John Tumazos: Benefiting From the Duluth Complex

Thanks, very informative.



Wording could be better in some parts. Anyone really think this is clear?


JT: I estimate that Duluth can spend a $1.5 billion to build 40,000 tons a day, and institute a dividend in 2018 when it goes from $20 to $40 and pays off 10% debt in 2019 and half a billion in cash in 2020 year end. And I estimate that from 2018 on, it’s trading at little more than $2 a share, which I think would be worth $30. So, I am saying $15.

Why not say, "And I estimate that from 2018 it will be trading at $30 up from a bit more than $2 now. So I am saying $15 as a target.

Minefinders: Racing Against the Clock to Production

Great analysis of Minfinders. Interesting and useful.