Surprising Observations From TrimTabs: "Are Central Bankers Loading Up On Gold?"

Tyler Durden's picture

When it comes to following the trail of money, capital flows specialist TrimTabs has traditionally focused on the stock market. In the past, TrimTabs' Charles Biderman has discussed how according to any reasonable calculations, there appears to be a key buyer missing among the usual market participant suspects, leading Biderman to conclude that the Fed may be buying stocks directly (or indirectly through Citadel as the case may be). To our surprise, in its most recent release, TrimTabs takes a look at the buyers in the gold market, and ends up with the same question: "Gold prices hit a record high in nominal terms for the second consecutive day.  We are not sure who is driving up prices." The speculative conclusion: "Are central bankers loading up on gold as they crank up the printing presses and keep interest rates ridiculously low?" Of course, at first glance this would be preposterous as it has long been accepted that for the Fed a jump in surge prices is a very adverse development. Well, is it? Traditionally rising gold prices have been merely indicative of abnormally high inflation, which for the Fed was a "bad" thing in the past. Not so much any more, or at least since the advent of the "wealth effect" experiment. Recall that it is now the Fed's "goal" to give the impression of inflation (and reality for those who eat and use energy). This is based on Bernanke's false assumption that inflation is much more easily controllable (15 minutes...) than deflation. So while on the surface this may appear to be a preposterous claim, in reality there is nothing that prohibits a gold price surge in the context of the Fed's third mandate.

Full observations from TrimTabs:

Who Is Driving Gold Prices Higher?  Speculative Traders and Fund Investors Not Very Bullish.  Are Central Bankers Loading Up on Gold as They Print More Money?

Gold prices hit a record high in nominal terms for the second consecutive day.  We are not sure who is driving up prices:

  • Commitments of Traders data indicates that non-commercial futures traders are net long gold futures by 3.7 to 1, which is a low ratio historically.
  • Precious Metals equity mutual funds—which hold mostly mining shares—redeemed 0.4% of assets in the past week.  Meanwhile, Real Estate funds and Natural Resources funds attracted 0.8% of assets and 0.5% of assets, respectively.  In the past month, Precious Metals funds lost 0.5% of assets.
  • Precious metals exchange-traded funds—which hold physical metals—issued only 0.2% of assets in the past week and 0.4% of assets in the past month.

Are central bankers loading up on gold as they crank up the printing presses and keep interest rates ridiculously low?

Whatever the source of the buying, we think investors could do a lot worse than allocate some of their capital to precious metals as fiscal and monetary excess continues around the globe.

Lastly, remember that there has been speculation that various banks are pushing for a mark to market treatment of gold held at central banks. Our own Fed marks its 8,133.5 tons of gold at $42.22/ounce. In other words, if at some point the central bank cartel needs to expand excess reserves even more, thereby creating an even greater "inflationary threat", what better way than to convert held gold from a fixed to a MTM price. For the Fed alone this move would imply a $350 billion "increase" in assets, which would then need a comparable increase in bank reserves (and currency eventually).

In an ironic twist, is gold about to become the "red button" to be pushed in the last ditch case when expectations of rampant inflation need to be created, following the next major deflationary market crash.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
LawsofPhysics's picture

"In an ironic twist, is gold about to become the "red button" to be pushed in the last ditch case when expectations of rampant inflation need to be created, following the next major deflationary market crash."


Yes, I hope.

Ahmeexnal's picture

And the MSM is finally recommending Joe Sixpack to buy gold AND SILVER!


This is it. It's going parabolic!

camaro68ss's picture

this is Such BS. I wish i can print paper money and exchange it for gold. F*** the bernake F*** the FED


Im the sucker who has to work for his gold and silver

FIAT_FixItAgainTony's picture

agreed 68ss.  i try to convert frn plague promises every time they get near me.  i always fear they may spontaneously combust due to the heat and pressure on them!

i know for a fact pm's are not known to burn!

btw nice avatar! 

quartshort's picture

I get your overall point in your post regarding the difference between fiat and metal, but indeed they do "burn". I use a 4000 degree torch to fume gold and silver all day long onto borocilicate for the purpose of creating tobacco related smoking apparati. Just thought I'd throw down a little known fact to our ever growing base of informed and entertaining cohorts.

Confuchius's picture


Evidently you have not yet run into the Au plated W; for which your torch would be 4000 degrees too cold...

quartshort's picture

HA! Now that's funny, and pertinent.

Ahmeexnal's picture

Newsflash:  Math Man and Johnny Bravo are the ones buying massive amounts of gold.

DosZap's picture

Along with every swingin weiner here.

DoChenRollingBearing's picture

Just bought some more yummy yellow today DosZap my friend.

SWRichmond's picture

I still buy a little more every now and then just so I can say "See!  I'm helping!"

Shell Game's picture

Same sentiment and actions here, brother.  Hope to see you on the other side. 

Cdad's picture

And the MSM is finally recommending Joe Sixpack to buy gold AND SILVER!

Ummmmm....if it is true, then that would traditionally be the sell signal.  It means that the Street has ounces for sale.

pointer's picture

that's what I would think - time to sell if mainstream media is recommending it to the masses - but it just doesn't make sense to sell now with all that's going on...

Ahmeexnal's picture

Remember we are no longer in a "normal" market situation. Events that should have made the markets crash are now cause for upward movement.  I would not rely on past "contrarian" positions, but on a clear analysis. And price explosion is exactly when millions of Joe Sixpacks and their moms make a run for the narrow PM window.  When that happens, and you see a orders of magnitude price increase, you could trade your PMs for other assets, never for fiat.

Buckaroo Banzai's picture

in the meantime... don't fight the Fed!

I think I need to buy a gun's picture

Don't say the mainstream media didnt recommend you to buy (at the last possible minute) after you blown 15k on Penguins or Capital season tickets the last 2 years.

Ruffcut's picture

Maybe when MSM says buy G and S, then joe should buy lead instead.

I think most gbugs are buy and hold, and will only give it up from "My cold dead hand".

I bought alot of sprotts shares, but have a pile of junk silver in personal storage. It was not a trade. I'll probably keep it until I need it, which is hopefully never.

Banjo's picture

You have to look at more indicators than a few mentions of MSM recommending gold. I did a little write up on gold about Sep 2010


Is gold in a bubble?


"Gold is not in a bubble. Currently on a global basis only 0.8% of all global financial assets are in gold, gold share and ETF's. In 1932 it was 20% and at the start of the 1980's it was 26%. If a total of 2% were allocated to gold the additional demand would amount to 85000 tonnes. Or total global mining output of almost 34 years"



Broad based public participation and the gold bubble.

The fact that gold is only now starting to be recognised as an asset class that mainstream financial professionals might consider holding and is still not broadly popular with the public, "the general public is hardly invested in gold yet"30 gives some indication that there is more upside to the gold story in terms of prices contining to move up. Gold does not have the euphoria of tech stocks of the late 90's, the US realestate market of the mid 2000's or the current Australian realestate market where homes are trading at multiples of ten times average income and producing low yeilds. There is no broad based public participation or euphoria about the current gold market. In my opinion we are at the tail of phase two or entering phase three of a bull market in gold where the public at large will begin to move into this asset class.



Gold conclusion.


Gold will be re-discovered as a stable, valuable, international and immutable asset class. Gold will eventually be an asset that people will be interested in holding over a lifetime. Gold has the ability to protect a portfolio in either an inflationary or deflationary environment, especially where extreme events are probable. Owning physical or allocated gold is important, paper promises or instruments based on leverage of the underlying physical will be liable for "cash settlement" or default if all holders make the call for real metal. The physical market globally is small compared to the global bond, equity and property markets. Prices may need to go much higher to bring additional liquidity to the market and clear the debt backed paper seeking the value of real physical gold.


The most benign analysis puts gold at reasonable value at current rates of $1300 more positive estimates put prices easily in the range of $2000-$2500 and up to $6000 or more on aggressive valuations. Ratio analysis indicates additional upside is very probable and current prices are not overbought. Talk of a bubble is easily scotched especially in relation to other asset class bubbles and their historic price and crowd psychology behavior. Gold prices are nowhere near extreme and the public is still overwhelmingly unaware and unconvinced of gold as an investment option.


There is enormous volume of paper and debt backed instruments compared to the total physical gold market. The future looks to central banks continued printing of larger volumes of money to support the massive volumes of debt in the system. Gold supply is becoming constrained by lower quality ore deposits and increased costs of extraction.


There is no free lunch and gold could suffer retracements of > 30% in any given year and for any pull back in gold to be sustained, investors would have to re-evaluate economic and business conditions as having genuinely turned the corner (e.g. Is the US still borrowing 1.2 trillion per year and adding that to GDP?) before balancing exposure to gold and allocating capital to the productive economy.


In the context of ongoing government debt financing projected many years into the future, sluggish economic performance and desire by governments to run large deficits, any pullbacks in the price of gold should be viewed as a buying opportunity.


Physical or allocated gold should be added to every investor portfolio as a long term event hedge and to benefit from the ongoing debasement of paper currencies. For a HIGH RISK high return play investment in gold miners especially juniors should be considered along side appropriate exit and risk mitiation strategy.




FIAT_FixItAgainTony's picture

the article looked pretty good, then i was disappointed at the end - buy paper!

oh well, at least they tried.  glad i got in at $13.  $8. would have been better, but hey, it's better to have awakened later than never!

now peeps first getting in at $39.50 won't have as much of a so-called gain, but they'll at least have a gain over not having bought and loosing all.

please remember this important fact - price in fiat means nothing.  you are going for a store of value.  value is something backed-by-nothing fiat will never have.

voltaire was correct.

Stuck on Zero's picture

The Marketwatch article is by the Aden sisters.  They've been advising PM purchases for twenty years.

RockyRacoon's picture

Sort of.   They do advocate selling when over-bought -- buy the dips as it were.

rosiescenario's picture

...I think it is more like 30+ years they have advised on buying (and selling from time to time).

bonddude's picture

Sorry, lost faith in TT when CB gave up on asking just WHO was buying all those s&p s.

F him.

RunningMan's picture

I should warn all PM speculators that I made my first ever physical PM purchase today, which virtually guarantees a decline in spot price since I've always gotten in at the top.

I would add that I'm a pretty conservative investor and have always been an aggressive saver, and the fact that I've done this reveals the depth of my belief that the US monetary system is in dire straits, and we will witness a currency crisis in the next 18 months if not sooner. Those on this site that have been saying this all along will ask what took so long... pattern thinking is a dangerous thing, but real nonetheless.

billhilly's picture

Runningman, WELL DONE !!!!  Congratulations and welcome to the club.

Do not worry much...put it away and rest well.  If the price declines, buy more...if it goes up, buy more. Win-win. 

My strategy has been to purchase X amount for every $50 move up in Au and 2X for every $50 move down.  So far, so good.  With Ag, I just buy when I can find the bars I like (RCM). 

Now, sit back and enjoy the feeling of your first-time!  It's almost as good as...well, you know!


SWRichmond's picture

I have also always been an aggressive saver but have been much more sensitive to watching my savings and perceiving their theft-by-inflation.

What took so long?

RunningMan's picture

I would chalk this up to old patterns of thinking and behavior being very hard to break. There is this initial disbelief along the lines of 'is this not an admission that things are really so bad?'.  I had the whole armaggedon kit together, just not the financial 'kit' (i.e. PMs). Now I will. 


SWRichmond's picture

I've been neglecting PT, but no longer.  Same reasoning.  Wisconsin pushed me into reality there. 

oddjob's picture

I bought another monster box today at 40.28 CDN per oz.

....and four 5 '9' maples.


I just dumped 26K of paper,feels good.


Think # of ounces,not price.

DoChenRollingBearing's picture

@ Running

I too always seem to buy on the spikes.  But, that's OK as I have been buying PMs for decades, more lately though, so my cost basis is not as ridiculously low as I would have liked.

I buy as I get money coming in and hardly let the price influence me.  I have bought so many times when "the price seemed so high" that I have just gotten used to it...

RunningMan's picture

Thanks DoChen. I told my family that I did this, and they sent me all sorts of links about bubbles and such. I told them I wasn't speculating or investing, but protecting myself from the currency debasement and eventual collapse. We all joke about the Fed and Bernanke, but I seriously think they have no idea just how much people are concerned that they are bringing an end to the US through a currency crisis. We see that they have no choice but to continue trashing the dollar since raising rates is an impossibility.g

RockyRacoon's picture

Hang in there.  My buying over $10 was very painful, but not so much any more.  Gold over $400 made me question my own sanity.   Not so much any more.

bushboy's picture

Runningman imagine as more people start doing what you just did for the reasons you did will be the start of the rush to PM's. This will eventually lead to a "The bubble" and is when I will bail out and buy a house or something.

Since I bought PM's I have felt a lot more at ease and not worried all the time like when I had shares. Even the ups and downs of prices in PM's doesn't phase me as I see nothing changing to stop the devaluation of all fiats. I also live in Oz and am  waiting and watching as our property market starts to drop in value. 

I am a late starter in ownership around 24 for Ag and 1300 in Au.

Good to have you onboard


covert's picture

better buy all you can before it gets outlawed.


PaperWillBurn's picture


"With gold near its all-time high, it's time for another Eurosystem MTM party. And just maybe, there is a timely message here for Congress and the U.S. Treasury."


"And today, three months later, that amount of untapped U.S. hard asset equity is $370 billion! The reason U.S. gold went up and European gold went down is simply because the dollar went down and the euro went up. That's the point of Reference Point Gold! It's what Robert Zoellick, head of the World Bank, was talking about. It's really no big deal! But today it may be a big deal to Congress."

mr66's picture

The central banks are following correct procedure and buying the precious metals.  They are not stupid.  They know that in the end, budgets everywhere will never become balanced so the need will be overwealming to kick the can down the road and have more QE.  It is the only way for survival.  The consequences otherwise will be too ugly.  We need more QE just to keep the wheels greased

Clueless Economist's picture

Bernanke probably craps in a gold toilet

oddjob's picture

...and we all know what he wipes his ass with.

Eternal Student's picture

At the current rate that the debt is increasing, has anyone calculated how much money is spent every time Bernake takes a crap?

Temporalist's picture

Calculating that would depend on one main factor:

Does one actually crap when solely feeding on the blood of unborn children?


Eternal Student's picture

Not sure why you got junked, Temporalist. But anyway, curiousity got the better of me, so I looked it up. One site is claiming that the debt is increasing by $4.09 Billion per day. That works out to $2.8 Million per minute. If it takes Bernake 5 minutes on the can, then that works out to be:

$14 Million per crap.

With gold at about $1400 per ounce, that's 10,000 gold coins per crap.

Turd Ferguson has nothing on Bernake.

bigdumbnugly's picture

scoundrels one and all

Trifecta Man's picture

Bankers don't want to left owning only their fake paper.  Real wealth is in precious metals.

Bay of Pigs's picture

Not many in gold even after an eleven year run. Amazing some call it a bubble.