RE:RE:RE:RE:it is simply the ongoing effect of these etfsPanamaJack wrote: The problem is not GDXJ, the problem is why were the holders of over 8 million shares willing to let go of the stock just weeks before what could be a very important announcement. Were any of you selling in anticipation of the NR, I think not, so why were they willing to sell, this is the real issue IMO.
Me thinks thou needs to study up on ETF's. You say they were "willing to sell" like they have a choice. They have no choice. They buy and sell underlying shares based on the market demand for the ETF's basket of stocks.
Simply put. The underlying index (in this case MVGDXJTR) has a SET percentage of Novo in it. The ETF MUST maintain the same VALUE percentage of Novo as the index, at the close. (It can vary during the day). If Novo goes down in value at the close, while other gold stocks go up, the etf has less than the percentage required of Novo. Therefore it buys more Novo stock at the close. If Novo goes up and the other gold stocks go down, then we have too much Novo (by market cap) in the etf, so it HAS TO sell some shares.
Second. With large inflows of money into the ETF it might run the ETF price above NAV (net asset value) during the day. In this case it may HAVE TO buy all stocks in the index at the close, to put the money to use and return the ETF to NAV. (This is normally done by arbitragers)
On a day like today, when Novo is down big time, yet most other gold stocks are up...expect a big increase in buying, from the ETF, at the close, to balance out Novo's percentage of the index.
Icarus