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Is The Parabolic Blow Off In Gold Accumulation By ETFs About To Cause A Gold Price Explosion?
The closing of gold at an all time high price did not prevent GLD from purchasing 1.9 tonnes of gold on the last 24 hours. The ETF increased its gold holdings NAV from 1306.1 to 1308. The all time record high holdings of the precious metal represent a 7.5% increase in the tonnage of gold held in the past month alone, which increased by 91 tonnes, or 7.5%, from 1217 tonnes. As the chart below shows, we have entered into a parabolic purchasing period for not just GLD, but for all other precious metal ETFs, which struggle to keep their NAV at 1. In fact, if those who claim that ETF are among the primary sources of gold demand currently, such reindexing is now creating a positive feedback loop, whereby daily record gold prices are forcing the ETFs to purchase more and more gold to retain a mandated NAV, which in turn is leading to even higher prices on the margin. The accumulation blow off phase has begun, and with a variety of ETFs announcing either shelf or follow on offerings, with the proceeds to be used to buy gold, it is only a matter of time before the actual price blow off follows. A more suitable question is why, if the purchasing of gold has picked up so much, has the gold fixing not followed?
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A more suitable question is why, if the purchasing of gold has picked up so much, has the gold fixing not followed?
I know, I know! It's because the ETFs don't actually buy any gold.
What do I win?
I'm sorry, the correct answer was:
"They never did own any gold. Nor do they buy any gold."
Your prize for being 50% right is this: http://goo.gl/G0sd
* Redeemable only where accepted.*
Is that the new Obama FRN?
Buenas tardes!
Admittedly off topic but when you have a moment, ask yourself these 16 questions:
http://www.businessinsider.com/16-burning-questions-about-the-oil-spill-...
The image links to 1 week LIBOR jpg.
And incidentally the Gold Price index doesn't look like any parabolic bubble to me.
fixed
Thanks I saw immediately...quickdraw mcgraw.
HFR. (High Frequency Reply)
Probably because it is no longer a "free market" either. And the central banks, who are dabbling in (more like gobbling up) everything everywhere have their hands in precious metals too. I will no longer be surprised to learn that there are central banks, including the Fed, that start to have holdings of lumber, strip malls, and water purifiers. Geesh!
The PMs ETF snakes have started eating their tails and will chomp away until - poof! Nothing left! Don't be the last fool holding the bag. The bag of paper gold, that is! Too much risk in owning anything of the ETFs. Good for trading and darting into and out of. Be safe - own and hold gold bullion/coins outside the system. You will be glad you did.
If the ETFs bust, and they own a substantial percentage of real gold, they may have to dump it. This will cause at least a short term "buying opportunity".
Au and Ag ETFs go bust, there are going to be a LOT of other problems too.
But, if they do dump a lot, I'll join you at the gold shop.
The gold ETF is just another blind pool for HSBC to ADD TO THEIR SHORT POSITION!
Judges take that..rite?
What did I win?
One thing I wouldn't worry about is ETFs sucking all of the available money out of the gold sector.
I could go on and on about what complete farces these "funds" are but I'm tired.
Instead, read this. It is all anyone needs to know about GLD, SLV et al.
http://www.bullionbullscanada.com/index.php?option=com_content&view=arti...
Good article. It is worth noting that funds with actual, real, touchable, physical gold, ie Sprott (PHY) and Central Fund often trade at a premium to NAV of 10% or more. I do not have exact numbers in front of me but a google search will confirm same. This of course raised the question of why GLD trades close to NAV but other funds, that GUARANTEE their physical gold, such as Central Fund, trade at a premium? Sounds like a good arbitrage to me, sell PHY and go long GLD..... hmmmm
Its easier for GLD to trade close to NAV since they arent encumbered with the cost of actually buying gold.
Seems folks investing in gold are willing to pay a premium for the ETFs that actually have gold.
If its gold paper people want, instead of GLD shares, they could just buy a Willy Wonka chocklate bar wrapper
From GLD's web site>
"Because the expenses of the Trust will be offset by the sale of Trust gold, the amount of gold backing each share (Ounces Per Share) will decrease gradually.
Each share will initially represent 1/10th of one ounce of gold, but this will decline over time. This reduction in ounces per share will be reflected in the NAV of the Trust."
Thus I would rather own PHYS for total physical gold amount
"Redemption orders are subject to postponement, suspension or rejection by the Trustee" That is from GLD's prospectus
Alos from their web site
"Because the expenses of the Trust will be offset by the sale of Trust gold, the amount of gold backing each share (Ounces Per Share) will decrease gradually.
Each share will initially represent 1/10th of one ounce of gold, but this will decline over time. This reduction in ounces per share will be reflected in the NAV of the Trust."
I compared their NAVs and their about the same now but as pointed out from their GLD's web site, their NAV will deteriate over time
this attached article would be more credible if it did not consistently and excessively refer to the security underwriters/issuers as "banksters". whenever someone resorts to perjorative name calling in order to "make their point", e.g. "blood sucking vampire squid", then it is clear (at least to me) that the analytical basis of the acusations must be lacking.
Bankster is a highly accurate term. Blood sucking vampire squid, not so much. But the worst is the official terminology. It's absurd that we call JPMorgan, for example, a bank.
Part of the problem is that we allow Banksters to define the terms of the debate by accepting at face value their self descriptions, no matter how wacky they are.
But you probably think banking is alive and well.
I disagree. Some writers using this name calling do it out of honest indignation, not for lack of argument. And if you have any doubt that the western banking and financial system is pemeated by repeated theft and fraud, you are not well informed. They -- most of these instiutions --are in fact fucking sociopathic blood sucking pieces of shit... and that is an insult to shit ... and they, along with multinationals... are mainly responsible for the looting of the middle class and destruction of the environment. And that is obvious to anyone who investigates and thinks.
Wow, now I feel cheap for not going so far.
I like Goooold!
How do we know for sure they are really buying gold? I don't trust them one bit. It is interesting they are publicizing their purchases so quickly and openly. Some very savvy gold experts tell me at least one more big take down in PM's coming soon but I sure don't see it. I am continuing to buy regularly. Plan to be at 90% in PM's within 6-12 months.
Options expiration is toward the end of this month. That is likely to force their hand, one way or another, as the price has risen significantly. I don't know what the interest looks like, but I'd be we will see a repeat of last time where there was a large number of contracts at 1200, and they will do everything they can to make sure they expire worthless. Last time, they pulled it off by the skin of their teeth. I bet they get blown out this time.
I agree they want the options to expire worthless. They do this to confound investors. My sense however these trusted experts are suggesting a much more aggressive take down coming imminently. Time will tell. I hope they are right for obvious reasons.
hope so...my short GDX position is moving against me >:O :(
The "shiny metal" has been viewed as MONEY and VALUE for over 6000 years.
Paper money, not so much. In fact, I view your European social welfare structure as a much more significant "ponzi" than anything currently trading on global markets.
Could you explain 'ultimate ponzi' to me as it relates to gold, because I'm having a hard time seeing how gold is the ultimate ponzi.
Thanks
Come on, this just make no sense. Gold has several applications as well as other precious metals. Paper money is the only thing with no other use besides being paper money. For what else would you use it? Toilet paper?Gold has its value since it is scarce. Anything scarce with perceivec value could be used as a reserve of value. Why do you think rich people by loads of famous paintings? It is the same rationale. Maybe ipads will be that in the future...
So funny cause this is what I was thinking...
Since an FRN is an essentially useless piece of paper, it's only worth anything as long as there's a greater fool willing to exchange goods and/or services for the worthless block of crappy paper.
Sound familiar?
Very well said. Positively disillusional.
Don't forget that the crappy paper can be printed up in seconds with as many 00000000's as needed, whereas that shiny block of metal represents many man-hours of labor extracting it from the earth.
and... it's beauty is mesmerizing
I don't get why women are so into white gold jewelry these days
ahhh, except gold DOES have intrinsic value as the cost of getting it out of the ground. Not so with fiat.
Nearly every age has been defined by our mastery over the metals. Even today's digital age would be impossible without metals. Gold is simply one the best all around metals to use in any application your small brain can imagine. Gold is so useful and versatile and always surprising us with new science, that we nearly recycle all of it or hold on to it for better uses in the future. The only reason it has been the favorite form of trade is it's usefulness. If no one wanted to use it for anything, it would just be kewl to look at, like fool's gold, but nobody would want it. Why do think people don't value fool's gold? Because it doesn't have the special properties of the element gold. Why does NASA use gold (and silver) in building spacecrafts?
You London Dude Trader are massively under informed, historically ignorant, and suffer from cognitive slippage. Aside from that, you are correct, gold is shiny.
Soros uses the word ultimate correctly...gold is the ultimate bubble...there is no other bubble after gold...just what JP Morgan meant...gold is money, nothing else.
truth=credibility=truth. There can be no such thing as an obsession with truth.
What about the debt-money fiat currency ponzi scheme?
Welcome Gold Member
The ultimate Ponzi scheme you portray is the US Government/Military Industrial Complex/fed balance sheet that pays for itself by creating inflation. Anyone who earns a wage and expects social security gets screwed.
I hate to tell you, but Ponzi schemes don't last that long. They last until there are no more people who are able to participate. Considering the entire world has been on a gold standard for most of the last millennium, and it never fell apart (it was only replaced with an unworkable gold exchange standard), I'd have to say you are blowing smoke out of your ass--possibly because your pants are constantly on fire.
No it doesn't. As the saying goes about the golden rule. "Those that have the gold rule."
I applaud the articles. Making people smarter is imperative. We are in the quickening.
Dear London Dude,
Please find the ZH mission statement below:
our mission:
You will almost never read, see or hear in the MainStream Media any deep analysis of the GLD holdings. Nor will you learn about the Gold Suppression schemes of the Federal Reserve....My point is as an informed investor, you need to be exposed to alternate view points and derive your own conclusions, rather that just rely up the financial cheerleaders that populate the MSM. I read Zerohedge because it is one of the few places where smart and informed investors openly share information crucial to your financial success. Imagine if, like millions of americans, you were dumb enough to invest as per the suggestions of, say, MSNBC. You would be stuck in a house with an upside down mortgage holding a nearly worthless portfolio of internet shares.
Just maybe a ponzi scheme that lasts 1000 years isn't a ponzi scheme.
You trade dudes? Are you long on dudes at the moment?
http://www.youtube.com/watch?v=wV0wPBYDQ6Y&feature=related
Dude, this is at least the third thread.......
I like the tune though. Enough to buy the CD someday.
The second.....FYI....You object?? The population on ZH does not visit ALL the threads you stumble upon..Should I not repeat? Because you captured the first iteration
??..
Your still in my camp...Thanx..good GD.....
i dunno why it hasn't kept pace. Why don't we ask the CTFC?
rolling.
I suspect the inflows would ease if gold were properly priced. The Fed and the bankers need to accept this level of defeat because there are different levels of defeat. It can get a lot worse for them.
The GLD ETF can't go on much longer reporting these massive inflows without moving the price. Something has to give.
aw crapola
I have to dig up my yard again cause GLD called.
No one has any real gold. I am last bastion of 1 ounce maples and eagles,
Shucks I'm a market maker now. I like the sound of squidlly vampire.
Someone check my maths:
GLD holds 1217t x 31250oz/t x 1250 $/oz ~ $50b worth of gold
1217t should be easy to check - where is it?
I ski on it in my back yard every winter.
Shhhh - they'll be after my "astatine inhaler" next....
Psst
This isn't really a butter sculpture
http://www.chrismclaren.com/blog/wp-content/images/2005/10/udder6.jpg
Psst
This isn't really a butter sculpture
http://www.chrismclaren.com/blog/wp-content/images/2005/10/udder6.jpg
Tyler, is this a rhetorical question?
The answer is embedded in your question, you just left out a tiny word.
"...gold (price) fixing..."
o BTW
this feedback loop will not end well.......
My nonbubble is becoming a bubbly game of whack the gold mole
Go try to buy some 1 ounce gold rounds like the eagle or cdn maple.
You'll be very surprised at what you pay over spot.
risk on
risk off
I can't tell which is which anymore.
Where my treat bad I need a hoot
bag
$47.95 over spot
http://www.tulving.com/goldbull.html
twenty coin minimum at tulving
wire um 25 grand ,,,
Apmex selling Roos at $1,284.75 ($1,279.75 if you buy 10)
http://www.apmex.com/Product/54827/2010_1_ounce_Gold_Australian_Kangaroo...
Actually there's some equivalents in Blighty as well - PHAU, LBUL summat like that - not sure how much they claim to hold - a further 2% of world reserves there phps?
Tyler, I love ZH, but frankly this absurd obsession with the millennium-long ultimate Ponzi scheme (shiny metal = Dutch tulips at the end of the day) and related anti-gold conspiracy theories certainly detracts from ZH's credibility.
I wonder if Bernie Madoff's clients could do it all again would they rather give their cash
to Bernie or invest in Gold?
Or not "invest" it in anything.... might be the answer if you really asked.
paper fiats = tulips
Distracts, in your mind, friend, but not in mine nor, it seems, quite of few others. And I would bet Madoffs clients wish they had that opportunity. And I doubt that that have read much about the history of gold, of money and financial history.
Distracts from ZH in your mind, friend, but not in mine and all minds are not created equal or are equally informed. And there are no gold manipulation theories now...they are so well documented that they have the status of natural law.
Is The Parabolic Blow Off In Gold Accumulation By ETFs About To Cause A Gold Price Explosion?
Nah, because GLD is not accumulating gold bullion (periodic table element Au).
GLD is accumulating paper gold swaps, futures, etc.
If GLD accumulated real Au, then the gold price would rise much, much higher.
A more suitable question is why, if the purchasing of gold has picked up so much, has the gold fixing not followed?
+1
It is unclear to my why a increase in spot price of gold REQUIRES the ETF to purchase more gold. An actual inflow of funds from new ETF purchases certainly would. However an increase in the price of gold would not require more ounces in the bank, IIRC.
There are enough gold experts here so that I hope one of them can explain thow this is supposed to work that higher prices, in and of themselves, require an ETF to buy more ounces without receiving any new cash. Thanks.
Is it because they don't hold 100% reserves of metal - they hold a value based fractional reserve which due to the leverage involved requires additional amounts of the underlying asset to keep up with their reserve requirement (when price goes up ... opposite applies when price falls)
Not 100% on this and would also welcome clarification.
no - augustus is right. None of the main gold etfs have to go buy more gold when the price of gold rises, nor do they sell gold when the price of gold falls. in fact, they only buy gold when they do a secondary offering - using the new funds raised in the secondary.
GLD, on a daily basis, doesn't buy any gold at all. The number of ounces of gold held by the trust increases when authorized participants (think: big broker dealers) deliver bullion to the GLD trust and receive new shares of GLD in exchange. They (the APs) do this because they had clients buying GLD, which the AP shorted to the client, while buying bullion - so they can flatten their position.
they make it very easy for you to do the math too -it's all in the spreadsheet on their website (which opens as a text file if you click TD's link above): the volume of gold held by the trust went up by 58,691 ounces. Each "basket" which corresponds to 100,000 shares of GLD, equates to 9781 ounces. So someone "created" 6 baskets, or 600,000 shares of GLD overnight.
Net short and starting to crap it?
Sigh. I've been wanting gold to puke so I could grab some more.
So, of course, it's going to explode instead.
Hm, maybe if I just call everyone I know and start bragging about how much I'm making in gold...
Here is what I have been doing for past five years - along the lines of having no faith in market prices or fundamentals - what I started thinking, @2003, was that we were going into a Depression, and, at some point, two things would happen - first, price of gold and silver would steadily rise, and, two, Middle Class and Poor folks would eventually sell their wedding gifts to pay the rent. These mostly silver wedding gifts would end up on Ebay, or at the local White Trash pawnshop. I tried to educate myself on the basics of buying Gold and Silver coins; and concentrated on mostly Tiffany Silver on Ebay. I trolled every pawnshop I could find, buying slowly. I have made some bad buys, and a lot of good ones. This wasn't the most sophisticated business plan - really the Redneck solution - but, it worked out pretty well. A lot of ZH commenters express their frustration with being alone - amongst their friends and families - viewed as a crackpot. I feel the pain - I come from a very educated family- and, to the last one- they have scoffed at my gold and silver purchases - scoffed at my distrust of Equities. One of my fondest memories was sitting around a dining room table- with some friends that are generally very educated, and street smart. This was 2005. We were drinking beer, and I noticed an envellope on the table, from some investment firm- and I picked it up- I was pretty drunk- and I exclaimed to these friends - look at this- this 401K stuff - you might as well as just take your money and throw it out on the highway!! What a waste!! You guys don't see it, but this is all gonna crash!! I was loving being in the freako wizard act - we had fun laughing at me. I then took 20 Kruggerands out of my napsack- I had made a purchase that day - and I passed them around to my friends. They actually kindof grew silent, and siad, Thnaks- I have never actually held an ounce gold coin. anyway, the evening just passedn into semi warm memories of craziness and friendship. But, you know - it really did hurt to be the crazy maniac - spewing this stuff, and how we did 911 ourselves - I lost friends - didn't really care to lose them. I wonder, now , how many of my friends look back on those days in 2003-05, and my rants, and think to themselves, Fuck, he was right. I'd rather be right, but it still hurts that many people -our friends - cannot seem to think things through for themselves- they only accept what is already agreed is consensus. It it is like the fucking Japanese, but without the hot chicks walking arm in arm in two foot high platform shoes, with glitter eye-lash- otherwise, it is just the same.
MackDaddy! That's a mighty fine story.
Thanks for taking the time to share it.
I sympathize with you but perhaps it was your infatuation with Marsha Brady that drove them away (just teasing your icon looks like Marsha Brady though).
Anyhow, I have lost friends too, and I don't care for them now anyway they are the walking dead. It's like in war movies; don't care to get to know anyone because they won't be there tomorrow.
http://knucklesunited.com/wp-content/uploads/2009/09/hotmarsha1.jpg
Yes, thanks for sharing the story. I understand, with family and friends I'm the fanatic, unhinged because of gold advocacy and view that the whole fiat ystem is collapsing. But one family member has listened and bought gold for the past four years. So thats enough success for being odd man out.
that pretty much parallels the last eight years of my life, starting as the 911 kook, in the winter of 2002, going to NYC (I'm a Kansas boy) to visit all the "alt" media armed with all my facts and charts. Was met with nothing but scorn and anger. I was too early and dealing with people who were too directly affected. That taught me a lot.
Ultimately, most people will only believe in that which makes them comfortable. Our MSM is more that happy to oblige. Most people's minds shut when confronted with any info that questions the comfort of their status quo.
The last six years or so, I've been the annoying gold bug guy. I've learned to do nothing but throw gentle hints to all my friends of what is to come and why they should be buying as much gold and silver as they can, and wait to see who shows any interest in learning more. So far, I've gotten (wait, let me check my records...) exactly zero people to buy zero.The constantly rising price of gold and silver has at least given me a little credibility in some people's eyes, and even though still generally regarded as a kook, I see the day quickly approaching when people finally realize that I knew what I was talking about all along. Don't get me wrong- I'm not looking forward to that day. I will always regret not being able to convince my close friends and family to protect themselves financially and otherwise.
My parents are the classic depression-era couple, spent their whole life with upside down ketchup bottles in their frig, drawers full of clipped coupons, doing anything to save a penny. Avid savers and investors, their lives are defined by saving money. Yet, all I see is investments and savings in ponzis and when TSHTF, my heart will be very heavy for them. They will not survive their loss. It will crush them.
85% of all ETF's ever developed preceded a 20% + sell-off in the underlying within 12 months (HSBC research )
And the stockmarket has done nothing but dump over and over since ETFs were invented. I sense a pattern that trivializes your observation.
What does the blue line on the graph mean? I don't recognize the term and don't know what is up 1300%.
its a bit tricky, in a closed end fund for instance the nominal price of the fund may be higher than the real value of the stocks the fund holds, because buyers are buying the fund, not necessarily the underlying stock. so what we have here is ah, how can i say it" a bubble? yes the GLD etf is becoming a very crowded trade, and interest in buying the etf far outstrips the value of the underlying.
what this means is that if you buy the GLD for a blowoff move to say 2000,and you are nimble, you can book some tremendous profits. on the other hand...
do you remember the Hunt brothers? google that to get some perspective.
Net
Asset
Value
The worth in FRN's of the gold they "hold".
Btw, the overnight beatdown by the Evil Empire has begun. Gold last 1242.80. An even $10 off the high set 8 hours ago.
The weekly battle continues. The Evil Empire will do everything they can to once again close gold under 1233 for the week. They've been successful several times in a row. Will they be able to pull it off again tomorrow? Any head start they can get tonight will certainly help their cause.
Tavakoli told you WHY physical gold is going to $5,000 last March. http://www.tavakolistructuredfinance.com/Gold.pdf
Equities will lead or follow , but they're going too.
"The trend is your friend"
PHYS and CEF trade at premiums because they are closed end funds with a limited supply. The ETFs GLD, IAU and SGOL can create and redeem shares as necessary. GLD and the other ETFs sell gold to meet their expenses because there's no other way for them to collect fees, gold doesn't pay dividends. If they held non-dividend paying stock, an ETF would sell shares to pay expenses. PHYS and CEF are also selling their gold to meet expenses, how else are they going to pay their bills?
I've been watching the options on GLD trading the past few days. As expiration approaches I'm seeing a lot of call buying around 120 and higher. Definitely a slant toward out of the money call buying in July and August.
I will never understand why people are willing to leave money on the table for no reason. Leaving 0.40% of 38.54 Billion dollars is 154.16 million dollars. Thats a pretty big expense to store something in a vault for a year... I wonder how many banks could be bought for a rental fee of 154 million dollars a year. Somebody is getting really rich for no reason. People, please take personal delivery... your gold will actually go up in value faster. There will be less and less gold in the system that can be traded - becomes rarer - makes it more valuable - connect the rest of the dots please!!!
Yeah, T Ferguson, and Temporalist - thanks for responding. There was very, very fine slice of time, when TV was black and white, and when you turned channels, there was a thunking you felt between the channel selections, and you turned a dial next to the TV, and the antenae on your roof actually turned to get better reception. When you turned off the TV, the electron stream channele down to a little point, and then disappeared, like Obama's credibility and potential talent. If you were a young kid in those few years - if you went to a sock-hop at the Firehouse, and listened to a LP of Rolling Stones, "Satisfaction", and the sweet smell of weed wafted in over the crackles of bugs getting zapped by the blue light - then you also new that, you were exposed to an incredibly small amount of new information. Young people now can simply not imagine what it was like to wait for the next month's Playboy. Marcia Brady was all we ever had. She was it- AN Angel - a shy Angel. In Black and White- to be weighed, in a young mind, against The Andy Griffith Show. The Newlywed Game- or The Dating Game, had some Mod looking women with sixties primped up hair- and there were the topless girls in Life magazine- at Woodstock. Then came Peggy Lipton in the Mod Squad - and, then, just when you attend a city highschool in 1972 - there is that incredibly HOT sister on Good Times. It was a differnt world then - and Marcia Brady - and Speed Racer to the guys who ended up as BuFus- she as all we had. I can't say that the world today, where Marcia Brady s flashing her Tanner 2 tits on Chatroulette- I can't say if it is better or worse= it doesn't matter - it is what it is, and todays kids can get off on Stephanie from Lazytown. But, there is no question in my mind, that I am very, very happy to have lived in a world where it was only Marcia Brady - an indelible slice of electrons flickering, and then a whisper of electricity across the screen- what was that sound? then silence.
That's inspired, thanks for sharing and thanks again ZH for being around.
Hey Mack. Have you ever hear Ella do the song of your name from 1958 when she blows the lyrics in front of 12,000 fans in Berlin and ad lib's the last half and then does a total Blowoff of "How High the Moon" that is a classic? Maybe are our tastes in music is different
First use of Precious Metals was the silver shekel in Sumer where you handed in your grains tithe to the Goddess temple (innana/ishtar). You were then given the shekel against your grains and you went round the back of the temple and handed your shekel over to one of the temple prostitutes with whom you had your way as a 'fertility and good harvest ritual'....so now you know why gold and silver are ingrained in our DNA and also why we get so religious about them.....