Gold Bubble?

Usually in a bubble, investors are holding a bag.

Investors have been net sellers of about 100 tonnes in the last 7 months. The IMF has disposed of another few hundred tonnes. Yet gold price is higher by around 10% in the same period.

To put this into context, since December 21st alone, 2.2M ounces have been sold from the ETF, basically a bit more than an entire quarter of production from Barrick gold (the world's largest producer). The normal run rate of global recycling plus mine production is approximately 2.95M ounces per month. So in the same period, assuming GLD was the only source of outflow, total global absorbed gold supply was 5.15M ounces. If outflows continued at the current rate, the GLD ETF (the largest investor depository of gold by far) would have no gold in 18 months.

Supply increased 75% in the short term to see price only fall 4.5%.

Someone else is doing the buying, clearly.

scriabinop23.blogspot.com

Comments

[unwashedmass]

um....people in GLD have been leaving...because, psst don't tell anyoone else cause JPM needs someone to hold the bag....

there is no gold in GLD. its all paper.

and articles about this starting appearing last summer, and.....

anyone who is in gold for longer than a week or two gets told by someone else...

GLD is for newbies -- they either get more deeply into gold and get out as soon as they learn the scam,

or, they get fleeced by the "custodian"

[nuinut]

Further relevant reading:

FOFOA: Who is Draining GLD?

The outflows indicate MASSIVE DEMAND FOR PHYSICAL GOLD.

When GLD can no longer satisfy this demand, look for paper and physical to diverge, unless further large sources of physical can be accessed.

Buy physical gold, if you want it, before this divergence, as it will carry a monster premium afterwards.

[nuinut]

RS View:

I’ve said it before and I’ll say it again now, the reporters are getting it wrong when they equate outflows of gold from the ETFs with “sour” investor sentiment. What they need to work harder to understand is that these are NOT actively managed funds whose gold inventory is tweaked to ebb and flow based on public sentiment in the shares. Instead, the ETFs are more like a central coat-check room in which the various bullion banks have temporarily hung out their own inventories (i.e., meaning, their unallocated stock which they hold loosely on behalf of their depositors). And whereas the claim tickets (ETF shares) may freely circulate on the open market, any significant outflow of physical inventory is simply and primarily indicative of a bullion bank reclaiming the original inventory based on a heightened need or desire for physical metal in a tightening market — for example, to meet the demands emerging from Asia.

[LowProfile]

Ya beat me to it nuinut.

...And update yer goddamn blog, Blondie! ; )

[nuinut]

I have, twice since your last visit, I believe.

[kentfinance]

i am a good example. i owned GLD whilst i figured out a reliable way to own the physical. because the physical is what matters. my guess is that is the explanation for "exits" from paper and physical shartages.

[DosZap]

And we reap the benefit, if we're smart enough to understand the premise.

As in BTFD.........

Watch for a low of 1225-1275, and load the wagons.If your a mind to.

[4xaddict]

+1

1. If you own physical PMs, hold it.

2. If you own paper PMs, sell it for a better buy back price as you cannot be stupid enough to be holding paper PMs as a long term safety investment

3. If you want to own either or both, try watching the 1220-1250 region to start accumulating and if you see 1180 pin your ears back and buy like a mofo.

The end.