Innocent negligence or is this something more malevolent? What do you folks make of this?
Innocent negligence... do you hear yourself talk? Are you kidding? In the foreign exchange case, they are trying to pin it all on BNY Mellon while arguing over the wording of their 'misleading' promotional material. That hardly seems like innocent negligence does it? They are hardened con artists trying to weasel out of punishment after misleading their clients. My only concern is how much do these people really influence GLD. Hopefully, not a whole lot.
Avoiding scenarios like this is one of the reasons I persist in search of information. Awareness is everything in this field and the mentioned business fraud linked to GLD's manager certainly doesn't help.
What stunk to high heaven is the disproportionate numbers in the CDO case. "investors lost $450 million" and yet State Street was fined $5 million. What gives? I guess investors amount to diddly squat to get unjustly screwed over like that.
In a fractional gold reserve system where paper gold is backed by underlying physical gold, the paper gold contracts are issued in greater amount of current actual physical gold. It is the physical gold that is fractional and not the paper. GLD is a derivative of gold holding where physical gold was leased and lent out multiple times. There is absolutely no reason when people sell GLD that managers of GLD would not go and sell gold to balance its holding. You are right by pointing out that GLD could fall by 50% in one day due to the fact that GLD may not have all the actual physical gold to back its shares because in their prospectus they point out that GLD also hold gold paper contracts which are promise to deliver physical gold!