ETF “Costs and Liabilities” Sees Investors Migrating to Physical Allocated Gold

GoldCore's picture


Today’s AM fix was USD 1,737.50, EUR 1,337.36, and GBP 1,080.40 per ounce.
Yesterday’s AM fix was USD 1,747.25, EUR 1,347.56 and GBP 1,086.87 per ounce.

XAU/EUR Currency 1 Year – (Bloomberg)

Gold dropped $18.00 or 1.03% in New York yesterday and closed at $1,736.40. Silver fell to a low of $32.62 and finished with a loss of 2.36%.

Gold edged up on Tuesday, but its appeal was diminished by positive US retail sales data.

In September, The US Federal Reserve committed to buying $40 billion of mortgage-backed securities on a monthly basis only as long as it is needed to improve the labour market.

The markets are also waiting on a firm commitment from Spain as to when and how much financial aid it requires as the eurozone crisis lingers on.

Physical buying in Singapore saw premiums jump 80 cent per oz above London prices for high quality gold bars.

XAU/GBP Currency Daily – (Bloomberg) 

The head of industrial and precious metals trading at Barclays, Cengiz Belentepe, has told Bloomberg that investors are selling their investments in gold ETFs and opting for the safety of allocated physical gold.

According to Barclays, gold holdings in ETF products are growing at a slower pace than in 2004-2009 because some investors may be moving to physical bullion after initial purchases of an ETF.

Gold holdings in ETPs have increased 9.6% this year to a record 2,582.98 metric tons, data compiled by Bloomberg show. They rose 7.9% last year and 19% in 2010. Growth in gold ETP holdings has exceeded 35% from 2004 to 2009, the data show. 

Barlcay’s Belentepe said “the question is whether the pace of buying has slowed, or whether the people have become a bit more sophisticated in recognizing the costs and liabilities.”

‘‘We’ve seen instances of people coming in, whose first step is to buy an ETF, second step is to get educated on how the market works, third step -- I’m going to shift this in direct gold purchase and storage, fourth step -- let me allocate this metal into these locations. It’s the early step they are all migrating through, expressing the same view but in different ways.”

One would have to be cautious here as Barclays have been aggressively marketing their new precious metal storage solution. Barclays may be attempting to capture some of the large capital flows that have flowed into the ETFs in recent months and continue to do so.

Gold ETFs have a very significant degree of counter party risk to the many counter parties such as the trustees and the many custodians and sub custodians. The ETF is a second rate form of paper gold in which one becomes an unsecured creditor of a trust rather than the outright, beneficial owner of allocated and segregated coins and bars.

Some of the largest hedge funds managers and most respected investors in the world such as Marc Faber, David Einhorn and Kyle Bass have all warned regarding the ETF and spoke of how they favour physical bullion.

Indeed, Bass has warned of the risk of a COMEX default due to the exchange not being able to fulfil its delivery commitments should even a small fraction of futures buyers decide to take delivery,

More sophisticated, knowledgeable and risk averse investors will continue to opt for taking delivery or storing allocated gold coins and bars.

For breaking news and commentary on financial markets and gold, follow us on Twitter.


Investors May Be Moving to Physical Gold, Barclays Trader Says - Bloomberg

Large buyers...providing fundamental support to gold above the $1,500/$1,600 level – Market Watch

Gold hovers above 1-month low; U.S. data weighs - Reuters

Gold Set to Gain for First Day in Three as Slump Spurs Purchases - Bloomberg

Ben’s Gold Touch - 148% Rise On QE – The NY Post


London or New York: Where and When Does the Gold Price Originate? – Social Science Research Network

Large buyers...providing fundamental support to gold above the $1,500/$1,600 level – Market Watch

Gold Slides Even As Ongoing South African Gold Miner Strike Means No Production On The Horizon -
Zero Hedge

Doomsday Cycle Targets America Next – Market Watch

James Turk’s New Estimate of World Gold Stocks – Resource Investor

$2,300 Gold, Here We Come – Casey Research

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jharry's picture

Hi Mike,

I think your heart and mind are in the right spot.  People are first, along with the eco system we live in.  Gold and silver and other commodities are tools to preserve that idea.  "L'individu" is important too, as the French thought in a revolution which closely followed ours.  Au revoir et bon chance aussi.


fijisailor's picture



Yes gold is a religion. It is even more durable a religion than christianity. Do you see an imminent demise of religion in the near future?

dust to dust's picture

MikeMcGspot. We are all brothers and sisters. I have my own support system it is FOOL proof. Nature is ONE with us. The Earth gives and the Earth takes. No mercy. Dust to Dust.

TradingTroll's picture

Great interview by Don Coxe this week

He said gold wont rise due to monetary base shrinking.

Forget what Casey says about $2300 gold, these charts clearly show that the effects of deleveraging are far greater than the moneyprinting thats going on.


Which is to be expected, really. With a 700 trillion dollar derviatives market how in the world is the stock market supposed to get excited about 1 trillion in stimulus.

sharky2003's picture

There's 3 ways to deleverage: default, (hyper)inflation or a debt jubilee.

For a while I was torn between option 1 and option 2. After witnessing the crowd reaction this election cycle (people getting mad over trivial things such as BigBird), my money is on the 2nd: inflation, for the simple reason that it's easiest to fool the masses. Recall those 100+ trillion in unfunded liabilities? There's no way those don't get paid out- If the masses are making such a big deal about BigBird, they would NOT be happy about no SS and medicare. So I do think those unfunded liabilities get paid out, they'll just print the money up and say "hey, aren't we great, we paid!", but the catch is that money won't be worth the paper it's printed on.

jharry's picture

Gee Mike,

We get it. You are right: the value of gold depends on the buyer's point of view.  To many gold has great value. To some gold has no value. But you can say the same thing for most things except maybe air, water, food, clothing and shelter, and even then with the exception of breathable air, there are many variations in value.

According to one story I read, Conrad Hilton, yummy Paris's ancestor, bought a hotel for one gold coin.  According to another I watched, a man in the Great Depression bought two meals at a diner for a solid gold lighter. 






MikeMcGspot's picture

Hey friend jharry,

Thanks for the courage of your response helping me to better understand our world. Courage is cheap and more valuable than gold in the real world a simple value that people are just starting to get.

It is about the story and the context of point of view.

In this current world of energy abundance a gold coin is not going to buy shit.

I drive a good 500 miles per week and cannot drop a gold piece down the pike to fill my tank it, is all FRN units.

The point of my rant this eve on gold was not about gold but about the x of y of axis on data per belief systems.

Value, real value.

How shall we define it?

Do you have the courage?

Stand up and shout people.


Bullshit does not = Reality


donsluck's picture

You have revealed your willful ignorance. Stocks also don't buy shit, but sell a couple of shares of AAPL and pay your rent. You are confused by the difference between money and currency. Do your own research. Gasoline still costs the same as it did in the '50's. One pure silver dime.

dust to dust's picture

 Great posts MikeMcGspot. Keep them coming. Disbelief and humor are essential for my critical thinking.

MikeMcGspot's picture

dust to dust, I appreciate your support, I been looking and trying to make sense of a lot of this stuff since last December and it all just broke loose tonight around gold.

You ever need some back up on a good idea I will back you.

If you make a good effort but did not meke the grade I will protect you.

I been in fight clubs all my life, am a good person with a strong team and take care of my KIn.

For now you are my kin if you choose

If the US really has so much Gold in storage, let's sell it to pay off the debt, invest in other more valuable metals such as Iron. 



jimmyjames's picture

If the US really has so much Gold in storage, let's sell it to pay off the debt,


You're showing us how smart you are-

The gold the US holds-if it holds any couldn't put a 10% down payment on 1/20th of the debt-

MikeMcGspot's picture

Yea Jimmy, I'm all with you on your proposal. No need to lie or re hypothacate OZ per $. Transformation of asset classes, redefining the world.

Truth is not that complicated. Courage is golden in the real world.




jimmyjames's picture

I'm not aware of making a proposal-it was you that made it and i was ready to kick all your dumb ass-but it looks like a cop out on your part-

DosZap's picture

Yep, and the PREMIUMS are already going up 20-40% over 2 -3 weeks ago.

The Chinee, and Indians, are buying all they can get even in the 1700+ range.

They do not want to get caught holding Benny Bux.

MikeMcGspot's picture


Once we move beyond the story of the Easter Bunny and the value of Gold as a utility in the real world as a point of value in terms of physical impact.

Those that hold Tungsten bars should count themselves lucky that you have such a mineral that can be made into a cheap earth destroying asteroid.

Gold sucks in the physical as long as the lie persist it holds, but Tungsten is better in the physical based on many measurable qualities of performance outside the virtual lie..

Periodic Table of Elements don’t lie, only people do or do not make the case for value.

Gold< Tungsten in the real world.


Jam Akin's picture

Why are you wasting (y)our time here, fool?


I have to poop. The paper will be useful, for once.  Paper sucks, you Wall Street fucks! I'll see you vampires in the sun, with my loaded silver gun. Yer goin' down in flames, from Lower Manhattan to the Thames. Your paper is I know not where, I'd rather shit my underwear!  For, be there bull, or be there bear, silver is the suit I wear! (With gratitude, and apologies to Dr. Seuss.)


The only paper I own is the stuff I wipe my ass with. Market paper is worthless, because I cannot do a good job of wiping my ass with it. Gold was worth $28.00 an ounce when I was a kid.

Silver was worth whatever was printed on the coin you spent. Any one think those days are coming back? All of the lying bum fucking aristocracy of the Age Of Paper Power can burn in their paper suits soonest. I won't even bother pissing on them to put out the flames.

I collect gold, silver, lead, copper, real dry powder, food, tools, diesel fuel, and other useful commodities. There is a community of folks all doing the same, so skill sets and extra eyes and hands can guard each others sixes. The rest of the world is watching Snooki, and / or has their heads up their technological assholes - AKA smartphone vs stupid user.  "


HFT ain't good for me. 

Credit defaults far as the eye can see.


CDS's gonna make some messes. 

Boo hoo hoo as thieves confesses. 

TBTF gonna fall off a cliff - REAL NEAT. Wall Street is a bunch of fucking dead meat.


Banks used to be so overleveraged bold.

Now, they're layin' bankrupt,dead and cold.

Gonna be nothing but prepared people,

all the rest gonna be surprised fucked up Sheeple.

God bless this mess.

I must confess.

I'm a fucking poet,


and didn't even know it.



MikeMcGspot's picture

Then there is Silver a consumable metal with high ROI in the physical.

Live long and prosper friend.

The thing I like most about this world is the frailty of belief system consturcts, the dying lies being bent and broken by simple questions and people who care for each other.

All the best!

Gold is a meme of lies.


Peter Pan's picture

Mike, I don't think you've noticed but it's yourself you are lying to.

QEsucks's picture

Mike Mc Gspot: Jon? Jon Nadler is that you?

MikeMcGspot's picture

I am Michael McGarrity.

Proud of my humility in terms of simply trying to understand.

What is gold? What is it's value in the physical?

Lie to me, tell me the value of gold.

Here is the secret, I got some sticks that I picked up in the woods last weekend after I whiped my ass with it.

For the low price of $1744.50 OZ you can lick my shit stick.


Happy trails bitches.

The real Tyler




donsluck's picture

You are not trying to understand. You are trolling. The understanding is available. Do your own research. I will not devolve into name-calling.

Peter Pan's picture

Exactly, if gold was and is useless then why did Nixon close the gold window and stop giving out gold for paper dollars?

jonjon831983's picture

Here's a good one:

"Bank of Mexico Admits 96% of Gold Reserves Held in US & London"

DosZap's picture

"Bank of Mexico Admits 96% of Gold Reserves Held in US & London"

As bad as both are, they are worse....................but, I would have chosen others for safe keeping.

MikeMcGspot's picture

I've been trying to figure out this gold thing for awhile from a value perspective over time in the physical world we live on now.

Gold is an idea of value in the virtual world.

Almost every ounce ever produced is still in existence and I believe per my little part of the world and what I see other places, global production ability is expanding exponentially.

Other than the idea of it it has very little utility value in terms of life support, sure it has some good radiation protection abilities, is highly ductile, and resistant to tarnish, shiny thing that makes good jewelry.

Our Voyager space craft are now exiting our solar system and have gold emblazoned tomes describing us in simple terms.

When I look at the Periodic Table of elements in terms of utility to survive in the physical world gold is one of the lowest elements on my priority list from the perspective of utility.

What is gold beyond an idea?

How long will it hold a store of value and why?

What are the properties of the substance that will make it so?

Thanks in advance for any response you see fit to post.

All the best!




fijisailor's picture

Yes gold is a religion.  It is even more durable a religion than christianity.  Do you see an imminent demise of religion in the near future?

Peter Pan's picture


I for one have not down clicked you given that others hopefully got the message through to you. Even so, just a few comments:

1. Owning or understanding gold is not compulsory.

2. What makes you think that a piece of paper which can be produced an infinitum and subject to abuse by bankers, is any more valuable than gold?

3. Fiat does not have any life support value, nor can it  be used for jewellery,  and serves no physical purpose at all.

4. Gold is one of the best ideas because it stops you or me or any other idiot from counterfeiting it to pay back debts. What would you prefer to hold as security for a loan? Gold or a promise?

5. Gold will always hold as a store of value subject to some fluctuations for all of the above and many more reasons. Just ask yourself, which currency has lasted both in usage and value? The current crop of fiat currencies have already lost significant value and all the previous ones have bitten the dust.

6. I am happy for you to look at the periodic table and deduce that gold is one of the lowest priority elements for survival. But in case you didn't notice, paper dollars are not on there at all.

I repeat, gold is one of those incredibly durable ideas that has been embraced by virtually all races over all periods of time. It simply has a set of attributes that virtually no other item has (with the possible exception of silver).

Just ask yourself, how much value is there is in the trillions of dollars that Bernanke has printed or in the trillions of unbacked treasury notes the government has issued to creditors.

Despite the above, I would be happy to consider any suggestion as to what else may constitute a unit of value that is broadly accepted, is durable, is divisible and transportable and does not rely on computers or man made laws to keep its value.

Ghordius's picture

good list, but there are more arguments, though they are a bit unsavory to many. can't change that


7. the Central and National Banks of this world have a monopoly on tax-tokens, also called currencies

8. currencies have value - because you need them to pay taxes to the governments

9. historically, whenever the printing of currencies exceeded a certain level, the CBs have to back those currencies. otherwise the governments themselves don't receive their resources they require and demand. and here enters gold in the scene

donsluck's picture

Gold is so dangerous to the Fed that it's ownership was illegal for many years.

August's picture

What is gold beyond an idea?


Gold is a marker for the energy which is required to separate it from not-gold.

A form for negative entropy, as it were.

Tango in the Blight's picture

Austrian economists say you should buy Austrian bonds.

MikeMcGspot's picture

Thanks for your reply August and courage to propose a definiton for  the substance called Gold.

A marker for the energy which is required to separate it from not-gold.

A form for negative entropy, as it were.

Trust is the essence I hear from your definition. We need more trust in this world built on better definitions of common understanding.

A question for you, outside the virtual and holy belief system of gold today, what BTU value does gold bring us?


As I view it it is never consumed to enhance energy production, it is net negative in terms of ROI, the story is we need it, it has always been a sore of value and will continue to be so. 

Per my BTU chart Gold is almost an excrament of mining, offering no real enhancement to the physical world.

Like a fairy tale without a virtue of learning.

Gold is negatiive on the energy scale a product which can dispell reality of people due to its glamor unless you buy the lie. 

Respectfully I must withdraw for the night on your comment of negative enntrophy. Although you did not propose a framework for measuring such I

will be first to articulate such a vision.

Very chatty I am in gold as a lie.

Lie to me

All the best!











August's picture

"A question for you, outside the virtual and holy belief system of gold today, what BTU value does gold bring us?"

My spin on that is that gold is a marker for BTUs which were expended in the past (reflecting time's arrow, again, in some sense).  I believe pure water would be a more appropriate universal measure of value, reflecting the energy required to separate it from impurities/salt; of course, gold is more compact, more easily exchanged, and prettier.  Unless you really, really need a drink of water right now.

MikeMcGspot's picture

We can always drink gold, or in the case we have gold to exchange for a person with water and were are really thirsty we better be well versed on its value and able to persuade our overloard of water why we should live.

A question on gold. If things got really desperate and you had 50 gallons of water or an OZ of gold and were hungry and wanted to trade for some food and you were thirst too and may need water to reconstitute your food.

What would be most valuable to you in trade, gold or water?

donsluck's picture

People without access to water, or who are starving, do not have time to trade anything. Your argument is black/white. There certainly is nuance in the world. In the final analysis you need shelter, water, clothing and food, in that order. But reducing everything to it's survival status is misleading. Most folks here are looking for investment ideas. Gold since 2000 has been EXCELLENT, as has silver.

Dr. Gonzo's picture

In one sentence:  "It would stop ass holes from creating 90 billion in new irredemible and intrinsicaly worthless dollars every single month forever."  That's pretty impressive in my book.   

MikeMcGspot's picture

The best thing I like about you Dr. Gonzo is that you got some balls and brains working in concert. Thanks for the music.

MikeMcGspot's picture

I'm all for re engineering reality. How you going to do it? You can only persist in stopping ass holes from creating billions of BS based on gold when you stop the BS of gold.

Most the gold ever made is in vaults, or on peoples bodies or horde.

In the physical world it does not offer a benefit in terms of survival unless you can get a lot of folks to believe the lie.

Gold is a lie, its value persists in preservation of the story of its value.

At this point I am just reaching out trying to determine the value of the substance, including all storys we may tell in terms of its super powers.

I keep on looking for the super powers it has, other than the false meme that people hold in the current belief systems, gold does not mean jack.

It is an arbitrary and transitory belief system that will be dispelled when the SHTF in the physical.

RIP = Gold

MikeMcGspot's picture

Cowardice = A down arrow without an attempt at a response to my simple questions. "Beyond an idea of value, what property does the metal gold have that offers better ability to thrive in the physical world? Why is it so highly valued? As we start adding tons per month to global supply and don't consume it what good is it going do to do for anyyone but the true believers?

MikeMcGspot's picture

"All forms of dedication, devotion, loyalty and self-surrender are in essence a desperate clinging to something which might give worth and meaning to our futile spoiled lives."

Eric Hoffer "The True Believer" l

Lnked to Gold by MikeMcGspot cause that is the way it is unless anyone can give a solid argument on why the BS of this metal continues from either a virtual or physical world perspective or reason.

Gold = Bullshit from a survival perspective in the physical world.

MikeMcGspot's picture

Keep pushing the down arrow without a response to reasonable questions on the value of the metal gold and how it contributes to our ability to survive in the physical world.

Iron is worth more than gold in the physical world from a life support perspective.

Other than the idea of it and the FRN you spent what is the utility of the metal?

Keep pushing your down arrow keys.


MikeMcGspot's picture

One of the reasons I think I got such a huge down arrow is most likely due to a time scale difference related to fear.

I love metal! It is great!

I love bull shit as long as it helps my plants out not being shoved down my throat.

In the physical world, Iron is more valuable than gold. In the virtual world which is dying, gold is the savior, the christ child, all the babes of the world will spread their legs for you if you have it.

You are a chump for gold, you are being lied to.

Tell me otherwise if you got the spunk,

Lie to me.

Hayek FA's picture

I will lie to you mickygstring, but first lie to me. Without Gold what money would act as a store of value?

whotookmyalias's picture

If only I hadn't lost my gold while kayaking in the Pacific, I could ask Barclays to hold it for me. I'm sure they will look out for my best interests.


Garth Turner ( a dumb Canadian)  says you should own ETF's and Not GOLD (people actually buy his garbage):

  • Best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics
  • Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques.

Tango in the Blight's picture

A gold bar in the hand is worth ten in the ETF's.