Hypothetical question

[klapka]

Nearly R6 billion cap in this ETF already. They have to buy physical platinum for underlying value. What happens if they run out of available stock? Does the fund close its doors for a while?

[kwagga]

Who says they have to hold the physical platinum ? Do they get audited? I doubt that. They could hedge the fact that they don't hold the physical metal in a number of ways. They're accountable for the paper value, not the physical platinum, or do I stand corrected ? For all you know they could have some deal with a platinum mine that hasn't mined the stuff yet. The platinum could still be in the ground for all we know.

[SimonPB]

it is an ETF so they do have to hold the metal and as I recall get audited daily as they fall under the CIS act ..
when they run out of stock, they buy more platinum and create more units

[klapka]

Ah yes thanks, I realise that. What I am getting at is -what if there comes a time when there is not enough platinum for them to buy?

[SimonPB]

well if plat starts running out ETF or no etf price shoots up

[EkisDoep]

I was wondering about this issue for Newgold and other gold ETF's as well. How do they keep up with the physical stock levels? If such massive amounts of positions are closed (to force the gold prie down). Does someone buy it from Newgold? Or is most of it just paper trading?

[SimonPB]

they sell into global psychical markets

[#8]

Quoted from a video by Gerald Celente... 'Commodity ETF's are not worth the digital paper they are NOT written on'. For me, this says it all. When it comes to actually claiming your gold, 10 contract holders are going to be chasing the same ounce. I reckon many traders already know this, which is why they are selling like crazy.