by Dave Kranzler, Investment Research Dynamics:
From the day back in 2004 that I first read James Turk’s analysis of the GLD ETF, I had suspected that GLD had been created to take investor money and accumulate a large pile of 400 oz bullion bars that would be used eventually to manage the growing western Central Bank short position in paper gold. Paper gold being the fraudulent, blunt instrument used to illegally manipulate the price of gold.
GLD’s objective is not to provide investors with the opportunity to own gold bullion by investing in the shares of an ETF. Rather, GLD is designed to track the price of gold. That objective is no different than what is accomplished by a gold futures contract or any of the dozens of numerous gold derivatives available these days. More to the point, futures and derivatives are sold even if the seller does not own the underlying gold bullion needed to deliver on its obligation. They are in practice fractional reserve systems, which allow liabilities for gold to far exceed the quantity of gold owned by the seller of that liability. – James Turk, “Where Is The ETF’s Gold,” November 2004
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