The effect of ETFs on Gold

[Gumby]

Not that it matters, but it makes you wonder how gold would have performed without the existence of gold ETFs...

The chart shows that the introduction of the gold ETF (GLD) on November 18, 2004. Notice how gold behaved after that date.

[align=center][/align]

http://www.businessinsider.com/gold-etf ... on-2012-12

[melveyr]

GLD certainly does make life very easy.

[WildAboutHarry]

In Craig's podcast of his interview with Rick Ferri, Rick makes the same case.  I suspect there is a certain amount of truth to that position.

GLD has not yet had a real stress test of sustained selling that I recall.  One wonders how GLD/IAU would respond.

[melveyr]

In Craig's podcast of his interview with Rick Ferri, Rick makes the same case.  I suspect there is a certain amount of truth to that position.

GLD has not yet had a real stress test of sustained selling that I recall.  One wonders how GLD/IAU would respond.

Yeah Rick Ferri's conclusion didn't really make sense though. Recognizing that GLD increased demand doesn't mean you have to bearish though. It's not like GLD is going to disappear and cause a reverse effect.

[WildAboutHarry]

Yeah Rick Ferri's conclusion didn't really make sense though. Recognizing that GLD increased demand doesn't mean you have to bearish though. It's not like GLD is going to disappear and cause a reverse effect.

His points were 1) gold was now much easier to buy post-ETF, 2) that ease-of-purchase increased demand, 3) and that hedge funds were using GLD for their nefarious purposes (OK, the "nefarious" part was mine), further increasing demand.

I don't think he was being bearish per se.  Reading between the lines a bit, his arguments against gold/GLD were similar to his arguments against adoption of the HBPP - recency, and the likelihood that recent "converts" would head for the exits when things went bad.

Or so I recall.

I do wonder how GLD would react if "everyone" started dumping the shares in a strong downturn for gold.  I guess another advantage of physical gold over paper is that physical is less liquid.

[melveyr]

Have you guys read about the new copper ETF coming out? That will be very interesting. Lot's of copper consumer's are pissed.

In a perfect market the existence of this product would smooth out supply moderating the price of copper. However, I wonder if people's speculative hoarding of it will end up exacerbating price movement instead of moderating it.

[murphy_p_t]

http://gyroscopicinvesting.com/forum/ht ... 3592#p3592

[l82start]

Have you guys read about the new copper ETF coming out? That will be very interesting. Lot's of copper consumer's are pissed.

In a perfect market the existence of this product would smooth out supply moderating the price of copper. However, I wonder if people's speculative hoarding of it will end up exacerbating price movement instead of moderating it.

is the stock ticker symbol DAC for d'Anconia Copper ?

[melveyr]

Have you guys read about the new copper ETF coming out? That will be very interesting. Lot's of copper consumer's are pissed.

In a perfect market the existence of this product would smooth out supply moderating the price of copper. However, I wonder if people's speculative hoarding of it will end up exacerbating price movement instead of moderating it.

is the stock ticker symbol DAC for d'Anconia Copper ?

Never seen that stock before. Is it interesting?

The ETF I am referring to isn't out yet I believe. JP Morgan just recently got permission so I'm sure a team of lawyers are working on setting it up as we speak.

[WildAboutHarry]

is the stock ticker symbol DAC for d'Anconia Copper ?

  I prefer Twentieth Century Motor Company (TWEN) as a comeback play.

Of course if you are interested in copper, the pre-1982 pennies are full of the stuff (95% copper).  Hoard them now while you still can!

The 1982 Lincoln cents were a mix of the old copper and the new copper-washed zinc core model (the so-called Zincoln cents).  Of course the old magnet slide can separate the two quite easily.

[l82start]

Never seen that stock before. Is it interesting?

    i have heard its a sure thing... 

  I prefer Twentieth Century Motor Company (TWEN) as a comeback play.

Of course if you are interested in copper, the pre-1982 pennies are full of the stuff (95% copper).  Hoard them now while you still can!

The 1982 Lincoln cents were a mix of the old copper and the new copper-washed zinc core model (the so-called Zincoln cents).  Of course the old magnet slide can separate the two quite easily.

  LOL i will look into it (TWEN) 

i have thought about collecting up nickles as well, i have heard they have run 11 cents per nickle at times lately...

[murphy_p_t]

i have thought about collecting up nickles as well, i have heard they have run 11 cents per nickle at times lately...

I read the same somewhere...this site suggests they're at par

http://www.coinflation.com/

[l82start]

it does look like it is at par today, i think the 11 cent price i heard was metal plus manufacturing cost, i looked to see if there was a chart that tracked it but couldn't find one.
i doubt it is worth the hassle to speculate especially if it is just bouncing around face value even if it did have spikes, plus how do you cash it? i think melting it down is a crime of some sort..

[murphy_p_t]

i thikn i saw there's talk to phase out the penny also (say goodby zinc standard)

gold standard. failed.
silver base. failed.
copper base. fail.
nickel base. ? (within sight?)
zinc. ? (within sight?)

sure glad the FED has mandate to control inflation. *sarcasm off&

OTOH...makes speculating much easier. (w/ no leverage and long time horizon)

[Pointedstick]

sure glad the FED has mandate to control inflation. *sarcasm off&

I get what you're saying, but on the other hand, inflation has been incredibly low for about five years now. 

[WildAboutHarry]

i have thought about collecting up nickles as well

Another freebie in circulating coinage.  With the US Nickel you get a double play, since the US version is only 25% nickel but 75% copper. 

Now the Canadians made a real nickel.  Theirs is mostly nickel, imagine that!  It also turns out that a nickel that is mostly nickel is magnetic, so the magnet slide and the Canadian nickel don't get along too well.