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Golden_Dawn
02-02-2012, 12:40 PM
Does anybody understand why the prices of ETFs are lagging behind the POG? It seems like a few months ago, before the correct, my ETFs such as GLD and IAU were pretty closely reflecting the POG. GLD was very close to 1/10th and IAU very close 1/100th the POG, but in last few months until today, they are lagging considerably behind. Whats up with that and can I expect it to change? Thank you for your opinion!

junior e
02-02-2012, 12:45 PM
The price is set by what the share sells for. Obviously the share prices are trailing what the actual prices of ag and au are.

Golden_Dawn
02-02-2012, 01:08 PM
The price is set by what the share sells for. Obviously the share prices are trailing what the actual prices of ag and au are.

Well, yeah, but why? That's a new feature. They didn't used to trail. Do you think they can be expected to ever catch up?

stoked1
02-02-2012, 01:13 PM
Perhaps it's because there is little gold backing the security

ifionlyhadsomegold
02-02-2012, 01:17 PM
if one thinks about physical PM's and the prems paid its safe to conclude we are dealing with paper metals.

slv is trading $.95 below spot. when i first started playing it was $.15-$.20 and that was less than two years ago. prems on physical have gone up? whats the better long term investment here?

;)

Golden_Dawn
02-02-2012, 01:24 PM
if one thinks about physical PM's and the prems paid its safe to conclude we are dealing with paper metals.

slv is trading $.95 below spot. when i first started playing it was $.15-$.20 and that was less than two years ago. prems on physical have gone up? whats the better long term investment here?

;)

Obviously nothing beats physical but I have both because ETFs are easier to trade.

Golden_Dawn
02-02-2012, 01:38 PM
Perhaps it's because there is little gold backing the security

Nope, both ETFs hold bullion!

Aquan
02-02-2012, 01:51 PM
Does anybody understand why the prices of ETFs are lagging behind the POG? It seems like a few months ago, before the correct, my ETFs such as GLD and IAU were pretty closely reflecting the POG. GLD was very close to 1/10th and IAU very close 1/100th the POG, but in last few months until today, they are lagging considerably behind. Whats up with that and can I expect it to change? Thank you for your opinion!

Becauase the system is completely rigged. Once gold prices starts breaking out there is a big change that the gold ETF will be STOPPED prior to it and IF LUCKY paid out at that much lower level.

cheesybread
02-02-2012, 02:16 PM
Nope, both ETFs hold bullion!

I think he might have been being smug. SLV/GLD are physically backed, however there is speculation that they might not have as much as they say.

vsg00
02-02-2012, 03:18 PM
Does anybody understand why the prices of ETFs are lagging behind the POG? It seems like a few months ago, before the correct, my ETFs such as GLD and IAU were pretty closely reflecting the POG. GLD was very close to 1/10th and IAU very close 1/100th the POG, but in last few months until today, they are lagging considerably behind. Whats up with that and can I expect it to change? Thank you for your opinion!

Unlike many other financial instruments, the price of GLD shares (PGLD) does not depend on sellers/buyer actions. PGLD is completely under control of the fund's manager. The fund's manager is selling/buying shares during NYSE working hours keeping the PGLD at the desired level. This perpetual process allows the fund manager to keep the quotient K=PGLD/POG constant with approximately 0.1% accuracy.

The fund admits that it is gradually decreasing K to cover the cost of managing the fund, including storage fees, insurance, etc.

I have been tracking K for awhile. At inception it was 0.1, several months ago it was 0.0975, now it is around 0.09725. It looks (I am not sure) like the fund is decreasing K by 0.00025 one-two times a year.

Silverthorn
02-02-2012, 10:03 PM
Sounds like the APs aren't doing their job for some reason. They don't want to sell in another market and buy the etf for some reason. Wanting to hold what they have perhaps? :rolleyes:

Silvercoin
02-02-2012, 10:33 PM
if the divergence continues, pretty soon investors will stop trusting the paper.

i flip it for profits and use the profits to buy physical so you could say i'm contributing to that divergence ;)

long run these gold etfs are going to be worthless with the govt protecting the company heads behind the swindle like Corzine. i can just sense it.

redmonster
02-02-2012, 11:23 PM
vault and management fees.

Read the prospectus.

I have physical stored at Scotia that costs me about .1% / year for vaulting and insurance. The ETFs have auditors, regulatory filings and such that eat into the fund a bit each year. OTOH, the spread is very tight so traders benefit on round trips.

blitzdude
02-02-2012, 11:52 PM
Nope, both ETFs hold bullion!

I used to trade GLD/SLV. I no longer do because I don't trust that either are backed by the metal they say they are. That's just me though, I feel much more comfortable with the physical.

As for the difference in price, you need to add in management fees, storage fees etc.

DonerKebab
02-03-2012, 01:34 AM
vault and management fees.

Read the prospectus.

This is the answer. When GLD was first issued it was nearly 1/10 of an ounce of gold. The management fee is 0.40%. The way this fee is paid for is by selling gold from the trust. So over time the amount of gold that one share represents falls over time unless the manager at some point "resets" the ratio by a reverse split.