Thursday, February 23, 2012

Gold ETFs

Do you own gold or do you own NYSE:GLD, there is a difference.

We have been shouting for years and a deaf marketplace writes us off as conspiratorial.  Again and again we urge holders of the gold exchange traded fund NYSE:GLD to read the prospectus thoroughly.  Please explain how we are the conspirators when this comes directly from their prospectus?
http://www.spdrgoldshares.com/media/GLD/file/SPDRGoldTrustProspectus.pdf
So naturally when we see Bloomberg finally catching on to the undervaluation present in the gold mining sector we have to laugh.  They suspect that physical gold buying has taken capital from what would have been mining investment.

If the owners of NYSE:GLD ever read the prospectus and discover that they own paper derivative claims on gold instead of the real thing what would that do to capital flows?

Gold mining firms are quietly producing record earnings and the mainstream financial marketplace wants nothing to do with the sector.  This is how you identify the early stage of a bull market.  This is how you drink upstream from the herd.

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