Gold

[etftalk]

Talk about thinly traded... Current bid / ask on GOE on Scottrade:

Bid 78.18
Ask 86.79
Last trade: 89.00

[Ryan]

If demand for gold is going up would it be a good idea to look at mining companies. I have been watching FCX.

Any suggestions.

[etftalk]

If demand for gold is going up would it be a good idea to look at mining companies. I have been watching FCX.

Absolutely! Some of us watch and trade GDX here, which is a gold mining ETF. Choosing one mining company can be profitable, but one bad earnings report or mishap on the [mining] site, and you could get hurt.

[etftalk]

GOE 118.00 +33.00 +38.82%

This one is quite entertaining.

[alevin]

Wow! why is this one so different from GLD or GDX? Is it just smaller so more volatile, or does it have different holdings?

[etftalk]

We haven't figured it out. Only Lady had been brave enough to dabble in this one so far.

I noticed this morning that AGQ, an ultra silver ETF, was doing something similar but not to the same scale. Silver was down .02 and AGQ was up 5% at one point.

[XL-entLady]

Wow! why is this one so different from GLD or GDX? Is it just smaller so more volatile, or does it have different holdings?

I think it is small enough that it can be manipulated. I was in it for a while and made 20% on my investment, then sold. Since then it's gone up an additional 60%+ but the thing is such a rollercoaster that I haven't dared jump back on. GOE's price doesn't seem to be pinned to reality.

Lady

[JTH]

A few hightlights http://www.bloomberg.com/apps/news?p...c&refer=canada

Gold Falls, Halts 2-Day Rally as Demand Wanes; Silver Declines

“It seems reasonably wise to reduce our gold holdings once again on this recent strength,” Dennis Gartman, an economist and the editor of the Gartman Letter in Suffolk, Virginia, told his clients today. “Unless there is a sudden upward shift in gold holdings by the ETFs, weak demand for jewelry will weigh upon the gold price.”

Gold futures for April delivery fell $24.70, or 2.6 percent, to $918 on the New York Mercantile Exchange’s Comex division. The price rose 20 cents last week.

Investment in the SPDR Gold Trust fell to 1,028.99 tons on March 6. Investment in the ETF is up 32 percent this year.

Gold and oil will be the best-performing commodities this year, according to a survey of investors by Barclays Capital.

[etftalk]

Wow! why is this one so different from GLD or GDX? Is it just smaller so more volatile, or does it have different holdings?

I found this on GOE:
Credit Suisse has been contacted by the New York Stock Exchange regarding extraordinary trading and price movements in its ELEMENTS exchange traded notes (ETNs) linked to the MLCX Gold Index — Total Return due April 10, 2023 (CUSIP No. 22542D209) (the “Securities”). The Securities currently trade on the NYSE Arca under the symbol “GOE”.

There is no lead market maker on the New York Stock Exchange currently assigned to make a market for the Securities.
In addition, Credit Suisse currently does not expect to issue any additional Securities. As a result, the maximum amount of Securities outstanding at any given time is not expected to exceed the 50,000 Securities outstanding as of today.

http://biz.yahoo.com/bw/090224/20090224006301.html?.v=1

[XL-entLady]

That wacko GOE is toast!

Elements MLCX Gold ETN Currently at 1,000% Premium: Sell Now

"Anyone who owns Elements MLCX Gold ETN (GOE) needs to be aware that the price is likely to drop more than 90% very suddenly.
The one thing that separates ETFs (and ETNs) from closed-end funds is the ability to keep price and “indicative value” closely aligned through a creation/redemption process. ETFs have “authorized participants” with the ability to exchange shares of the underlying asset for shares of the ETF (when the ETF is trading at a premium) and vice-versa. This arbitrage mechanism is lacking for closed-end funds, so they are always trading at a premium or discount.
I recently pointed out that MacroShares trade at premiums and discounts, but they at least have a logical explanation. However, Elements MLCX Gold ETN (GOE) is trading at a 1,000% premium for no apparent reason.
Checking their website for news doesn’t help, as the latest press release is dated October, 2008. The FAQ explains that a daily NAV is not calculated, so the “indicative value” will be used for the purposes of determining repurchase price.
The note issuer for GOE is Credit Suisse (CS), and the distributor is Nuveen. The prospectus indicates that the offering is for $250 million (250,000 shares at an initial price of $10). It appears that there are only 50,000 shares outstanding, so issuing more shares should not be a problem.
Keeping the price aligned would seem to be a simple task of:

• <LI _extended="true">issuing more shares <LI _extended="true">sell them on the open market <LI _extended="true">collect an outrageous premium
• repeat as necessary

Eventually the premium shrinks to the point of making it no longer worth the effort. That is how ETF/ETN price arbitrage is supposed to work. The price versus indicative value discrepancy started to creep in during the first week of February and has been accelerating ever since.
So why aren’t Credit Suisse and Nuveen issuing more shares to take advantage of this huge premium? An Elements representative states there are two problems causing this: 1) the market maker has run out of inventory, and 2) the issuer (Credit Suisse) has decided not to issue any more shares.
In other words, Credit Suisse is about to shut down this fund. They have stopped issuing new shares, but they haven’t announced the fund’s closure yet. The irrational volume in February allowed GOE to escape the latest issue of ETF Deathwatch.
When the fund closes, remaining shareholders will be liquidated at the indicative value. Additionally, Credit Suisse could decide to start issuing shares again. Either way, the price of GOE will eventually return to its indicative value. Meanwhile, another 20,500 shares exchanged hands today, pushing the price to $114.90 while the indicative value is $10.05. Someone is about to get hurt."

http://seekingalpha.com/article/1250...emium-sell-now

Lady