ETFs Exposed on CNBC!! Are they prepping us for Gold ETF failure?
Everyone knows CNBC is the cheerleading squad for the financial fraud football team....so what was just aired is concerning.
They spent almost 10 minutes explaining and exposing the investment world's little darling, the ETF (Exchange Traded Fund). For those unfamiliar, an ETF is a vehicle that can be used to speculate on an already existing asset or index where actual physical holding takes place, be it gold, oil, shares of stock in a company, etc.
The problem with these funds is that unlimited shares can be created....and they have been created. In their example, they show how an ETF mirroring the S+P has over 5x the allocated shares in the actual underlying index. That means if people holding the ETF actually wanted to convert their ETF into a physical holding....only the first 20% would be able to do so and the rest would be holding worthless paper based on nothing. In reality, it would be closer to 99% because there is no way an ETF could deliver even a fraction of the actual index.
ETFs have been the "in" thing over the past few years....and is a vehicle to support or supress underlying assets. Why a report would be issued now, warning about the smoke and mirrors of ETFs...then paraded onto CNBC......I have to think it is possible we see a failure of some sort in the future and the warning was just given.
In my opinion, the most likely failure happens in the Gold ETF as physical prices start to gap up and people start to realise they aren't holding any real asset through the GLD ETF. If just a single digit percentage of holders ask for Physical gold.....the ETF would bust, and physical prices would fly after the fraud is exposed. This has been a common theory in the metals circles....but the fact it is going mainstream makes me think we are closer to that reality now.