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Sprott Physical Silver Trust ET Message Board

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  • xraythrives xraythrives Feb 21, 2012 11:43 AM Flag

    Ted Butler's Reply

    Well then you tell me, is there a difference between doubling up the paper (flawed hypothesis) on the physical verses 20X the amount of paper to physical?

    You implied having twice the paper to physical is a problem so what happens when it is more than 20X?

    Your hypothesis is also flawed because even though a share may be borrowed, only one person can control it (trade it) at any time.

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    • hamlees@sbcglobal.net hamlees Feb 21, 2012 6:06 PM Flag

      I'm not sure that I agree that when a share is borrowed in order for the borrower to sell short then only one person has control of that share. I think we can agree that the new buyer has control, but what about the original owner whose share was loaned out? Doesn't the brokerage house tell the original owner that he still is able to sell his share even when it has been loaned out? What if both the original owner and the new owner decide to sell at the same time?

    • Your hypothesis is also flawed because even though a share may be borrowed, only one person can control it (trade it) at any time.

      RESPONSE: Not Flawed. Because if the original owner (of the lent shares) decides to sell his stock the person who borrowed said shares (The person who borrowed then sold - the short) must immediately replace the borrowed shares to the original owner...

      if the stock went up in value from the time is was borrowed the short loses...

      if the stock went down in value from the time it was borrowed the short wins...

      Simple as that.

 
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