How Gold Prices Affect the Stock Market - Conspiracy by Commercial Banks (2002)

• published: 16 Oct 2014
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Gold exchange-traded products may include exchange-traded funds (ETFs), exchange-traded notes (ETNs), and closed-end funds (CEFs) which are traded like shares on the major stock exchanges. The first gold ETF, Gold Bullion Securities (ticker symbol "GOLD"), was launched in March 2003 on the Australian Stock Exchange, and originally represented exactly 0.1 troy ounces (3.1 g) of gold. As of November 2010, SPDR Gold Shares is the second-largest exchange-traded fund in the world by market capitalization. Gold Exchange-traded products (ETPs) represent an easy way to gain exposure to the gold price, without the inconvenience of storing physical bars. However exchange-traded gold instruments, even those which hold physical gold for the benefit of the investor, carry risks beyond those inherent in the precious metal itself. For example the most popular gold ETP (GLD) has been widely criticized, and even compared with mortgage-backed securities, due to features of its complex structure. Typically a small commission is charged for trading in gold ETPs and a small annual storage fee is charged. The annual expenses of the fund such as storage, insurance, and management fees are charged by selling a small amount of gold represented by each certificate, so the amount of gold in each certificate will gradually decline over time. Exchange-traded funds, or ETFs, are investment companies that are legally classified as open-end companies or unit investment trusts (UITs), but that differ from traditional open-end companies and UITs. The main differences are that ETFs do not sell directly to investors and they issue their shares in what are called "Creation Units" (large blocks such as blocks of 50,000 shares). Also, the Creation Units may not be purchased with cash but a basket of securities that mirrors the ETF's portfolio. Usually, the Creation Units are split up and re-sold on a secondary market. ETF shares can be sold in basically two ways. The investors can sell the individual shares to other investors, or they can sell the Creation Units back to the ETF. In addition, ETFs generally redeem Creation Units by giving investors the securities that comprise the portfolio instead of cash. Because of the limited redeemability of ETF shares, ETFs are not considered to be and may not call themselves mutual funds. http://en.wikipedia.org/wiki/Gold_price Bill Murphy is a former American professional football player, financial commentator, and the chairman and director of the Gold Anti-Trust Action Committee (GATA), which was founded as a result of Murphy's essays on collusion among large financial institutions to suppress the price of precious metals. Murphy believes the price of gold is artificially low and has spent years lobbying the US government to investigate market manipulation in the gold market. Born William J. Murphy III, he grew up in Glen Ridge, New Jersey and graduated from Cornell University in 1968. While in college, he played American football and went on to become a starting wide receiver for the Boston Patriots. He then went to work at Merrill Lynch as a trainee learning the commodities markets. He later worked at Shearson Hayden Stone and Drexel Burnham, eventually starting his own brokerage firm. From 1993 to 1996, Murphy lived in Miami, Florida, where he was an entrepreneur Murphy is now a financial commentator and operates a financial website for investors of gold. Murphy began compiling evidence and writing about manipulation of the gold market in the mid-1990s. His claims about a gold cartel and market suppression were initially ridiculed as conspiracy theories and discounted. In 2008, the CFTC released a report in which they acknowledged that since the 1980s, they had received "numerous letters, e-mails and phone calls" alleging that prices in the silver market were being suppressed. Murphy and GATA have gained recognition, but still have difficulty being covered by the mainstream media. On March 25, 2010, Murphy spoke at a hearing of the Commodity Futures Trading Commission (CFTC) on position limits in precious metals markets. Murphy identified Andrew Maguire as the source of information on market manipulation in the silver market. Maguire had contacted Adrian Douglas, a member of GATA's board, after Maguire was not invited to speak at the CFTC hearing. http://en.wikipedia.org/wiki/Bill_Murphy_%28businessman%29