Dan Norcini made an interesting comment before the HUI recovered most of its losses last night:
"One last comment about the HUI the mining shares continue to be on the receiving end of the hedge fund ratio trades. They got hit with a double whammy talk of a 40% Australian tax yesterday plus todays severe broad equity market sell off was too much for mining share bulls to handle. We will be watching to see when buying support emerges in this sector. The shares are no longer the indicator for gold as they once were, not with the advent of the gold ETFs which have siphoned off a considerable amount of investment money that would otherwise be finding its way into the miners. Those who designed those infernal creations, knew what they were doing."
At http://jsmineset.com/2010/05/04/hourly-action-in-gold-from-trader-dan-264/
My comments:
Isn't it interesting how at present the normal excitement that attaches to gold equities during a gold bull appears to have been managed?
Just think of the huge paper gold shorts in London and on the Comex.
Now think about the billions of dollars being spent by investors, large and small, to purchase paper investments in ETFs that are meant to be fully backed by physical gold under the Trusteeship of major paper gold shorts.
By the way, I assume everyone has checked to see whether or not a large paper gold short is involved with any Australian listed Gold ETFs. I wonder what anyone has found?
Knowing what foxes do, I wouldn't put them in charge of a chicken pen. Would you?
If I knew someone was burning down houses I wouldn't want that person to mind my house? Would you?
If I knew someone instead of being long gold was massively short gold I wouldn't want them to be involved with my gold ETF. Would you? Apparently the answer from many people is, "Yes. I'm fine with that."
Why don't the major gold ETFs have as their trustees businesses that are not short one ounce of paper gold?
Just out of curiosity, why are investors quite OK with a massive paper gold short being the Trustee of the physical gold they are meant to have invested in through their ETF?
