USO

can you please explain? What would be some worst case scenarios. Like could the ETF be stuck on some -40$ futures and basically go bankrupt?

Also what if the opposite happens. Imagine one day gold futures basically sky rocket, because the longs demand physical delivery, but the shorts can't get any gold anywhere. Maybe the whole future system would collapse, because suddenly everybody wants to get their physical, but it doesn't exist. How would a gold ETF react to this, especially one that is based on physical storage.

Well along with the upcoming defaults on literally everything, yes. Not being able to profit off oil exports is a significant blow.

U should have

Thanks guy who read a blog once

since you seem like a decent gu, ill tell you - but I dont feel like typing paragraphs so youll also have to do your research

USO is a commodity ETF, gold is MUCH easier to store than oil. Since USO has no place to store their oil they'll have to continually sell at a loss exacerbating their contango problem, most of their contracts that they bought for $24 expire next month. take that as you will

This is exactly what's going to happen and these ETFs will be dissolved, but might could make a quick buck in the interim

There are 10mil americans that work in the oil industry. Once oil pumping has stopped (and it will very soon) most of them will be fired.

Pic related btw

Attached: api_jobs_study_states_chart.png (720x936, 340.96K)

Did this guy end up sudokuing himself?

Furthermore the leases/loans of the oil companies will default especially since theyll need to find a way to fund plugging an oil well (VERY VERY expensive)

What about the opposite? What if the the contracts can't be fulfilled because their is not enough physical material on the planet? This might sound silly, but everbody knows that there is way much gold traded than it actually exist. Normally this is not a problem. But people are getting already nervous, because you can't buy gold and silver atm. and I think those companies are now all trying to get it from the futures market. I can't imagine that it will be bad for the ETFs, the price will simply skyrocket. But what happens if basically nobody wants to sell anything anymore, because there literally is nothing to get. Would the ETFs simply pause? Did something like this ever happen, when there was a shortage of something?

So I basically found this about gold:
finance.zacks.com/can-comex-default-delivery-11599.html

>Investment fans of gold and/or silver say there is enough potential for COMEX to default on delivery and that at some point, the prices of precious metals must go much higher. According to the imagined scenario, a large number of futures contracts presented for delivery would force the COMEX to go into the spot market to buy the metal it needs to deliver on those contracts. The extraordinary demand would quickly push gold or silver higher, forcing the COMEX to default when it cannot afford to pay for or even find the gold or silver it needs to fulfill its contractual obligations. However, the nature of futures contracts and the COMEX rules make this outcome very unlikely and -- according to one silver value expert interviewed by the TF Metals Report -- it is possible that the futures exchange could just elect to settle contracts in cash in a worst-case scenario.

So an physical gold based ETF should be somewhat fine, even in that scenario. Maybe they have to temporarily shut it down, for example when COMEX goes bankrupt. But as long as the ETF really has all the gold they claime they have, losses should be acceptable. It might be difficult to get the money out for a while, but it's not like they will be able to simply steal this from you.

Good thing stonks are green every time unemployment moons

To issue a future somebody has to have the item in stock. Also somebody is always willing to sell, if nobody is willing to sell the prices skyrockets until somebody is willing to sell.

If there is fraud then the buyers of the ETF are fucked a la 2008

>but it's not like they will be able to simply steal this from you

He doesn't know.

well but maybe nobody can sell, because the material simply doesn't exist.

What happened in 2008? Where the ETFs a fraud, or where they investing in fraud. So basically if it would turn out that COMEX was a huge fraud all along, would ETFs who are storing physical gold in their basements still have a problem?

Issue everyone stonks as part of their severance. Have the Fed do it because they own most of the stonks market.

> Aren’t ETFs basically indestructible?

Roughly 25% Of ETFs Closed During Past Five Years
SEPTEMBER 25, 2019 • JEFF SCHLEGEL

fa-mag.com/news/roughly-25--of-etfs-closed-during-past-five-years-51860.html

>would ETFs who are storing physical gold in their basements still have a problem?

You think they actually have all that gold? I guarantee they just have IOUs like everyone else, and those IOUs are on gold that's leveraged 10x or 20x.

At that point if you have connections you might just want to cash out and see if you can obtain at least some physical from someone who would be willing to sell...but that's dicey.

ETFs are not indestructible. Nothing is indestructible but physical Gold. We just saw that even oil can go below 0.

Well some of them are clearly a scam like GLD. But I trust the ZKB and UBS ones for example.