20 September 2013

Amazing - Another ETF Tells Investors They Can’t Redeem

In this powerful exclusive, I want to tell my readers that I have heard stories about plenty of people who have actually tried to take significant amounts of the shares of SPY (the S+P 500 ETF) to the custodian and been told that they can’t have the 500 underlying stock shares.

IMPORTANT - Powerful entities do not want people to have access to the debunking that Goldchat provides. As a result I have had constant ignoring of, and interference with, this blog. Simply reload this blog repeatedly (don't listen to those that claim this will just increase my page hits, they are bankster shill).


For those overly sensitive types who got all uppity about Shortodile Golddee, the above is called a parody. For those who don't get the joke see here (Eric will be disappointed that he hasn't achieved total gold blog world domination).

What I find amazing is that neither Grant nor Eric are aware that the only people who can redeem GLD for gold are Authorised Participants (and they only get unallocated gold, to boot). For those who are interested, I explained the redemption mechanics in detail in this post.

My best guess is that this rumour is based on is some large investor going to HSBC and asking for metal. Now ETF custodians will reject that because they can't take the shares directly, it is the trustee who gets (or issues) shares and then tells the custodian to give or take gold - the prospectus says that only Authorised Participants can access the redeem or create shares process.

It is a bit confusing what the rumour is, because initially Grant talks about someone going to the custodian, but then later mentions Authorised Participants. The other possibility is that the large investor went to an Authorised Participant and asked them to take their shares and redeem for gold. Again, the prospectus does not give GLD holders this right. I suppose an Authorised Participant could do it if it wanted, but there is no obligation. If the Authorised Participant involved was not a bullion bank with its own vaults, but just a paper trader/arbitrageur, then I can see how they would not have the capability to get physical for a client, particularly as they only get unallocated when redeeming.

Either way I think the custodian or the Authorised Participant telling the investor to bugger off is where the rumour starts and as we know with Chinese whispers the details get lost and it become generalised.

What I think would be news is if the investor went to one of the large bullion banks and the bank would not do a swap (buy GLD, sell them Allocated). In the meantime, this is no more than gossip.


  1. Very humorous.

    Question: Which gold commentators do you feel offer "valid" or "well reasoned" or "good depth of knowledge" in regards to Gold and the machinations of the gold marketplace (maybe your top 5-7).


  2. I forgot to include this gem from Andrew Hoffman in my post:

    This Is Crazy – GLD Now Refusing Physical Delivery, Despite Its Own Rules! (http://blog.milesfranklin.com/this-is-crazy-gld-now-refusing-physical-delivery-despite-its-own-rules)

    "Per the GLD prospectus, holders of at least 100,000 shares (worth $13.5 million at today’s prices) have the right to redeem them for the underlying physical bullion. However, given GLD’s close ties to the “banking Cartel,” such rules don’t appear to apply to the general public. Only a handful of individuals – and institutions – can accumulate that much stock; and those that did so with the intention of taking PHYSICAL delivery, they are finding that GLD is no more a “bullion fund” than a un backed COMEX gold contract."

    It helps if you actually read the prospectus Andy.

  3. Top 5-7! There probably only is 5 or 7 in the whole internet :)

    I'll have a think about it, problem with those things is you annoy those you leave off.

  4. Bron,

    May I suggest you name three of your "top seven", then anyone complaining has no grounds as they, not you, have excluded themselves.

  5. Re-wording: How about the first 5 you turn to? Obviously, there are others you might go to for specific topics or for confirmation of the first 5's thoughts.

    Or even those you feel are inept, but want to see what they are spreading.

    No one should take it personally.