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Guest Post: Exchange Traded Funds 'Dumping Gold' – Does It Matter?
Submitted by Pater Tenebrarum of Acting-Man blog,
Gedankenexperiment
Imagine the following: you read in a newspaper that a group of investors has sold US dollars to the tune of $820 million over the past two months for other currencies. This incidentally represents approximately 0.082% of the broad dollar money supply TMS-2 (which amounts to roughly $9.3 trillion at present). It means they would have been selling roughly $20 million per trading day. You then learn that $4 trillion of US dollars are traded in global currency markets every single trading day. Would you believe that their selling has influenced the exchange value of the dollar beyond a rounding error?
And yet, we are supposed to believe that the selling of an equivalent amount of gold from the gold holdings of exchange traded funds over the past two months (they have sold 140 tons, or 0.082% of the total global gold supply) has greatly influenced the gold price.
According to a recent press report:
“Exchange traded funds have transformed the gold market. Since the first fund was launched nearly a decade ago, the products have become so successful in offering a simple way for investors to buy physical gold that they have acquired the nickname “the people’s central bank.”
But what happens when the people’s central bank decides to sell?
That is the question now haunting the bullion market. Since the start of January, gold ETFs have dumped 140 tonnes of gold. February saw the largest monthly outflow of gold from ETFs on record.
The sell-off is partly a reflection of broader negative sentiment towards gold, as investors become more confident in the global economy and put their money into riskier assets such as equities. Prices have slid 12 per cent since October to less than $1,580 (U.S.) an ounce, and are down 18 per cent from their record nominal high in 2011.
But the shift to selling by ETF investors is a concern in its own right for the gold market.
“The acceleration in gold ETF outflows is worrying,” says Joni Teves, precious metals strategist at UBS. Suki Cooper, analyst at Barclays in New York, describes a continuation of the current selling trend as “the key downside risk for prices.”
The reason is that ETFs have become a major presence in the physical gold markets.
Since the first gold ETF was launched in Australia in 2003, the products have become enormously successful. The funds offer investors a relatively low cost and easily tradable way to access physical gold by holding gold in a trust, which then issues shares that can be traded on an exchange.
With some 2,491 tonnes of gold held around the world, collective ETF holdings outnumber all but two central banks: the U.S. and Germany. ETFs hold enough gold single-handedly to supply the jewellery market in India – the world’s largest consumer of the metal – for more than four years.”
(emphasis added)
Sounds real scary, right? However, the only sentence above that is in any way meaningful is this one: “The sell-off is partly a reflection of broader negative sentiment towards gold.”
How the Gold Price Forms
That is all it is: a reflection of sentiment. The tonnages traded and the fact that ETFs could theoretically supply “Indian jewelry demand for four years” are more or less irrelevant. What India consumes in jewelry in four years is the amount of gold traded in London alone on three or four good days. Since all the gold that exists is always held by someone, the total demand for gold is at any moment equal to its total supply: it amounts to 170,000 tons. 140 tons sold by ETFs in two months are like a drop in the ocean.
As Robert Blumen has explained in great detail in an article we have published here a while ago (“What Determines the Price of Gold?”), the decisive factor for the gold price is neither mine supply, nor scrap supply, nor jewelry demand, and by extension, also not the supply provided and the demand exercised by ETFs. Instead it is the reservation demand of the current holders of gold that is the most important factor determining the price of gold.
So how can we, given these facts, make educated guesses as to where the gold price will head, or whether gold is presently over- or undervalued? To this end one must use indirect means, namely one must consider the fundamental drivers that are apt to induce gold holders to either lower their selling price or hold out for a higher one. We have discussed these in previous articles, so won't go into these details again here. See “Gold Still Misunderstood”, “Precious Metals, an Update”, “Some Thoughts on Gold Part One and Part Two” for a discussion of these drivers and how to properly analyze gold.
Having said all that, we want to briefly return to the use of ETF inflows and outflows as a sentiment indicator. It is true that a persistent continuation of such outflows would be a worrisome sign, as it would indicate waning investor interest in gold. Although the amounts concerned are too small to matter for the gold market, the ETFs are a reasonably good microcosm of the sentiment toward gold. However, experience has shown that large outflows in the very short term are often a contrary indicator. The ETFs tend to be the last entities where selling materializes, and selling in size is often seen near the end of short term downtrends. Should the holdings of gold ETFs stabilize here and inflows resume, we would have confirmation that investor sentiment toward gold is once again improving. It is solely in this sense it is useful to monitor these flows.
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Paper gold is still paper. Buy phys.
I dont believe it
This should be a warning sign for gold investors...this is informed big money exiting these vehicles before the paper/bullion fraud exposure becomes toxic....they are not going to be bagholders for the paper ponzi. Soros was the first big player out of GLD...
Soros and Buffet amongst other "patriots" are exiting stocks en masse.....should I leave stocks too? it's all manipulated shit. I'm buying land and hard assets.
Be sure to avoid urban developments and focus on holding large tracts with fresh water, trees but not too far from other people, IMHO.
The real question is how/when ETF's will release their huge volume of smoke and vast inventory of mirrors into the marketplace.
I can see spot run down to $1000 but with a $2000 street premium on physical or thereabouts (or some other unimaginably garish dislocation of the current scheme). Let the pundits punditate on Iran when 401k eats shit and dies, let Rand Paul bloviate about flying monkeys while the wicked witch prints away wealth.
I'm surprised I'm the first one to post this. According to the bylaws of GLD, if you buy a large enough position, you can close that position out in physical gold. In the absence of a functioning futures market, this is the only sure fire way to obtain physical gold in size.
Might explain why the gold is leaving GLD.
True. It seems the logic of the article is 180 degrees out of phase. THis is bearish for goldish paper, and bullish for real physical.
I can only hope that the spot price of gold drops to $1000/oz. I'm all-in at that price.
No shit
I believe Einhorn, then Bass, then Soros?
This is the " we better sell it, before they figure out it doesn't exist" moment..
Hang tight, this is just getting started.
Yes, expect massive dumping of ETF's as the money goes towards the phys right before the music stops and people grab a chair. I love how the ETF's are supposed to make it "convenient" for an investor to own physical metal ROFL!! Convenient how? A single ammo can will hold $30,000 worth of silver and over $1,000,000 worth of gold.
Take your "convenience", your cash settlements, your ETF's and shove them up your a$$ banksters!!
Evil Soros may actually have sold GLD to manipulate the gold price down, so he could buy physical cheap when everyone was selling. Don't underestimate their wiliness.
I said something similar on ZH back when it was first reported he was dumping GLD. What I think though was that he was shorting GLD and redeeming his shares for physical because he's a big enough player to do that. So he gets the physical at the same time GLD tanks and he makes a paper killing on short of paper GLD.
Soros ain't stupid...
Don't know him personally (as well as many bloggers seem to) to call him 'evil'. If they're referring to him using his brains to get richer, and as long as he isn't breaking laws or having them changed (like GS and JPM do), then the problem is... where? Is he not just looking out for himself? Unlike we here, who are totally selfless. Right? /sarc
Now watch some Neanderthal down-arrow me, just for posing a fair question.
Are you insinuating that everyone isn't like me and buys gold to watch the homeless waifs scurry after the coins I toss in the street?
Don't be ridiculous.
If you like Kyle Bass (I do), you must like Soros. Soros did to the Britponzi what KB is doing the the other ponzis (Jap, USD, Housing, Greece, etc).
Digital Gold is just ones and zeros floating around in a cloud. At the end it will go PooF.
i thought that was bit coins.....
everytime i figure out the answer, they change the question..
very deeply sorry to remind you that a bitcoin is worth 1.5 ounces of silver now
These ETFs are banker creations by the same entity's who brought you LIBOR fraud, so anything coming from them is suspect. Second, I am hearing people are selling these known fraudulent instruments and buying physical.
We'll know our disinformation program is complete when everything the American public believes is false.-- William Casey, CIA Director (from first staff meeting in 1981)
That's why the title would be more aptly called: "Exchange-traded-funds-dumping-paper-for-bullion".
Speaking of "JJ", I'd be leveraging some of JJ Luna's (How To Be Invisible) skills and methods to retain PM and privacy in these times.
Smashing down the sentiment at all costs is the primary goal the Fed is pursuing; it is necessary to curb physical demand at least among domestic people. The Fed knows very well that gold price cannot be hammered for a long time vis-a-vis the unequivocally positive fundamentals and strong foreign bank physical demand seen recently. It may just hinder the natural price increase as long as it takes. But anyway, the fact that paper gold price is so divergent from the fundamentals is stunning and probably hardly ever seen in recent history.
If, however, the Fed fails to desist from the practice a brand new gold market behavior will likely evolve; the whole available physical metal supply will be transferred to the East/South and every normal investor will soon realize the physical supply squeeze and unsustainable gap between paper and physical, which can eventually lead to a major switch in overall gold perception. Theoretically, the Fed may go and pretend even further; it may entirely cut off the spot price from everything else but this is too dangerous because PM miners would have to eventually stop slumbering, wake up and apply a significant premium to cover (at least) the production costs in the omnipresent inflationary environment. This could lead to a bizarre situation when spot price would be, say, $1600 and premium additional $1600. But should this happen, the gold market as we know it would be virtually toast.
There is less room for the Fed maneuvers than one would expect. It's a thin-ice dancing that may go out of control sooner than planned.
It's all a shell game. Don't get tricked and BTFD.
Sage advice, sage advice. We bloggers on ZH have been saying since last Nov. that some big fish is manipulating PM spot prices (downwards!), and that it's time to move paper-gold to bullion-gold.
The one thing that worries me, is their sociopathic disregard and callousness to free PM markets. Theirs seems a philosophy of "hammer ANY competitor or threat to the dollar's GRC status!". Am certain that they will manipulate the spot price to the extent that -- as you put it -- "the gold market as we know it would be virtually toast."
At that point -- gold or no gold -- we may be stuck behind the Economic Iron Curtain, run by the central politburo of the Fed and its shareholders. And have a New-World Order (Plan B), rather than a New World-Order (Plan A).
We need to keep an eye on both the supply and sales margin of bullion. These will be the 'canaries in the coal mine'.
that's a pimple on the gold supply's ass. secondly, much of their "holdings' were nebulous
Thats good for me. Am able to convert some savings into metal. Does that explain the drop in savings rate ? Meanwhile I am sure the Indians are loving these prices. After all the only good gift a father can give his daughter in wedding is some good gold jewelry. Everything else is trinkets.
It's articles like this that make me love zero hedge so so much.
Since no one else is gonna say it, I will. Silver, bitchez!
And when Gold holdings by an ETF are reduced, that means the Gold just evaporates?
“The sell-off is partly a reflection of broader negative sentiment towards [PAPER] gold.”
~~~
There ~ fixed it
Exchange Traded Funds 'Dumping Gold' – Does It Matter?
They are not DUMPING GOLD, they are dumping IOU's for Au.
They are not dumping; just moving it to where it is needed in the face of escalating demand. The physical cupboards are bare. BTW, the author should read the GLD and SLV prospecti; the average investor can not redeem physical and none of the bullion is allocated. Before he puts words to paper. he should do some research; MFG or PFG ring a bell?
Ah, the inverse of the Greater Fool theory: The Lesser Fool theory! Where each successive fool hopes to dump it to a less-informed (but more hopeful) fool. The last fool in the ETF line pays more than anyone else.
It is easier to assume that 0.082% of the holders of gld finally got around to reading the prospectus.
Exactly ~ You don't even need a boat to lose money in paper gold...
I wonder if the holders of gld have paper boats that sink as soon as they try to launch them so they can go out and accidentally lose their paper gold. That must be annoying.
I lost all my GLD in a boating accident
~~~
http://www.google.com/search?rlz=1T4TSNP_enUS476US476&q=paper+boat&um=1&ie=UTF-8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=Jqs4Uc7aBKf-0gHB-4GwCA&biw=1920&bih=964&sei=K6s4UdvhG-PR0wGYloHACA#imgrc=2Qwo9djANDEcCM%3A%3BSMoB28Ehio0DvM%3Bhttp%253A%252F%252Fus.123rf.com%252F400wm%252F400%252F400%252Fkanate%252Fkanate1107%252Fkanate110700174%252F9971756-origami-paper-boat-recycled-paper-craft-stick-on-white-background.jpg%3Bhttp%253A%252F%252Fwww.123rf.com%252Fphoto_9971756_origami-paper-boat-recycled-paper-craft-stick-on-white-background.html%3B1200%3B1200
my favorite
http://www.youtube.com/watch?v=vLVKyKy4Sx0
Did you see that ammo box of gold go flying out of the boat. Wow! Wonder if they were able to find it?
The price of physical gold in sterling has hardly moved
I know.
Just used some spare pounds.With the pound down 7% recently why no price change ?
With your moniker name, I think you can figure it out. :-)
Why can't you Brits, like everyone else in the world, finally decide on ONE name for your damned currency already?
PS: The British pound, in its current incarnation, is about as "sterling" as my bowel movements.
.
Gives a new meaning to the term "dropped a few quid".
I do hope, that sometime before I die and start pushing up daisies, that market commentators will STOP referring to mythical "investors". Hot money playing casino games concentrated in 0.0001% of the population is not "investors", and to pretend that their daily actions (culling of sheep) represent sentiment of the masses makes me gag.
The gold price is a reflection of sentiment? I suppose if you only count those that matter. No, not. Fail for trying too hard to be part of the system of pretense. Also added to my personal ignore-this-idiot list. I need an app for that.
You're right. There's no volume. So who's buying? I think it's mostly institutional buyers driving the markets higher right now. It's a classic setup.
could just be part of a broader shift of paper ownership to physical ownership. Paper is above market so price will see it more than physical bidding which is more opaque.could be what's going on.
You are telling half the story. There is also a phys side as we all know. Without knowing the phys delivery numbers from the gold ETF, we do not know how much physical is trully being sold in the market or removed by non western entities.
The gold ETF may be an easy way to invest, but it is holding paper. For large hedgies it may be OK, but for the average investor, it is a coffin waiting to be filled.
Here, some link for you. Check the second colum from the right:
http://www.spdrgoldshares.com/assets/dynamic/GLD/GLD_US_archive_EN.csv
Somebody more experienced than me about this sort of thing suggests that funds are being moved out of the GLD in order to fund shorts on other equities.
Fuck gold, you want to invest try.
http://www.dailymail.co.uk/news/article-2289592/Im-Barbie-Man-Collector-spends-80-000-fills-bedrooms-3-000-Barbies-says-wants-twice-many.html
Close to 10am...when the regular daily slamdown takes place. Gotta make sure it doesn't break up through $1,585/oz and that they finally cross $1,567/oz, which they failed miserably at yesterday...Never mind, unlike you and me, they can print all the paper gold they want to achieve this and you can only stare from outside...
That is all it is: a reflection of sentiment......
............gee i thought the clueless masses were investing based on solid tangible fundamentals like real organic world growth........after all, that is why the stock market is doing so well, yes??????
OT
Paul Krugman, I guess debt does matter!
Paul Krugman Files Chapter 13 Bankruptcy
Thursday, March 07, 2013 Paul Krugman, the king of Keynesianism and a strong supporter of the delusion that you can print your way out of debt, faces depression at his very own doors.According to this report in Austria's Format online mag, Krugman owes $7.35 million while assets to his name came in at a very meager $33,000. This will allow the economist and New York Times blogger to get a feel of how the majority of Americans go about their dreadful lives without any savings and a social system that will only shed pennies to him.
Krugman's list of debts shows a stunning similarity as to what's wrong these days. The biggest chunk is related to a $8.7 million loan for his Manhattan condo, followed by $621,000 in credit card debt. Krugman probably is not seen of 5th Avenue anymore. Among his list of creditors, Tiffany's stands out with a $33,000 in open collections.
http://www.prudentinvestor.com/2013/03/paul-krugman-files-chapter-13-bankruptcy.html
Satire pieces should really be labelled as such.
?? could be satire I suppose,
From: http://dailycurrant.com/2013/03/06/paul-krugman-declares-personal-bankruptcy/
Economist and columnist Paul Krugman declared personal bankruptcy today following a failed attempt to spend his way out of debt.
In a Chapter 13 filing to the United States Bankruptcy Court in the Southern District of New York, lawyers for Krugman listed $7,346,000 in debts versus $33,000 in assets.
The majority of his debts are related to mortgage financing on a $8.7 million apartment in lower Manhattan, but the list also includes $621,537 in credit card debt and $33,642 in store financing at famed jeweler Tiffanys and Co.
Could be. Maybe, maybe not. I guess there's no way to tell.
In other may-be-real-or-may-not-be news, as seen by clicking on the logo on the top-left corner of the website...
"Outrage Mounts Over Girls Gone Wild North Korea Video"
"Catholic Church Blasted for Lack of Jewish Popes"
"Pope Benedict Comes Out as Gay"
EDIT: I've been had. Thanks to.... I forgot to check who posted it
Dr Paul Krugman you have my sincere apologies,
Dapper Dan.
Certainly satire. And phunny.
"According to a recent press report"
Too fucking funny........
ETF = E xchange T raded F raud , not Exchange Traded Fund. I didn't bother to read the article though , so 5 down arrows for me I 'spose
Exchange Traided Fundoom?
The vessel ID number for the original Enterprise ?
They are selling it into the hands of cnetral bankers and billionaires most likely. It's really pretty simple. When you print paper and exchange it for a hard asset you are better off yes.
Saving my money in money. GLD is just a device to collect all of you sheeples gold in one place so the frbny can just take it all and give you $42.22/ounce.
Watch as GLD goes from ~$152/share to $4.42/share as they confiscate all gold held by the public.
http://www.fms.treas.gov/gold/index.html Status Report of U.S. Treasury-Owned Gold OverviewThe Status Report of U.S. Treasury-Owned Gold (Gold Report):
http://www.fms.treas.gov/_images/bullet.gif);">- Reflects gold bullion and gold coins owned by the federal government
- Summarizes the fine troy ounces and the book value of gold held by various facilities
- Identifies the value of gold coins and bullion on display at Federal Reserve banks; coins and bullion in reserve at the Federal Reserve Bank of New York; and gold held by U.S. Mint facilities
The book value of gold is currently $42.2222 per troy ounce. The information used to compile this reporting is received from the U.S. Mint, Federal Reserve banks, and FMS.
Current Report: February 28, 2013
Contacts:If you have questions about this report, please call (202) 874-9866.
Anyone that buys GLD is just waiting to get ripped off by your dear leaders.Let's see... $10,000/$42.2222 (dollars/Oz) = 236.8 oz. that one can legally take in or out of the US, w/o having to violate the $10k rule and w/o having to declare it. Is that right, Uncle Ben?
And although gold is not a "currency", per US Customs forms, at 'street value' ($1,600/oz), this is ~ $378,000. At that amount, it's actually worth to take a few thousand dollars worth of 'book value' and store it outside the US.
Uncle Ben, can you please, please, please keep dropping the spot price down to Book Price? I have spare FRN's I'd like to trade for more Book Value, and being a 'traditional' sort of guy, I have to hold it for reasons of Family Tradition. Thanks!
I am not making this up. The $42.22/oz notional price is listed on the gov't website. Why do you think Homeland Security needs a trillion rounds of ammo? To pry your gold from your death grip.
Nobody beats the system.
Many have tried only to be kicked in the teeth by the FBI or ATF (see Randy Weaver). They killed his whole family and shot his dog too!
What makes you people think they won't do the same to you for nothing?
Format tells it's readers at the end of the article that the source for the info on Krugman is the satirical publication "The Daily Currant"...
http://dailycurrant.com/2013/03/06/paul-krugman-declares-personal-bankru...
what sell you r GDY share , mybe because you are waking up, and the price of phyical drops? WINNING!
Externalities should and often are an indicator of internal productivity. However, at times externalities are "relocated" in an effort to create the appearance of internal productivity.
Academically speaking to place a full reliance on the conventional wisdom that when you are knee-deep in externalities equates to "There must indeed be a pony in here somewhere" has often times resulted in sudden unexpected shifts closing the gap between perception and reality when it is discovered that someone simply off-loaded their dump truck of droppings at your feet... whether by accident or intentionally.
Finding yourself surrounded by pony productivity has the dual effect of disappointment with the added challenge of digging out on your own.
www.tradewithdave.com
you guys are a bunch of idiots if you still go for this Reckards/Sprott/Fofoa claims of paper vs Physical, utter morons
care to substantiate your diagnosis?
Oops gld march call ? real shame.
Please enlighten us. What is idiotic about owning physical gold ?
JPM is a GLD custodian. JPM runs a COMEX vault. JPM's vault is attached to the Fed's vault. GLD doesn't sell gold, it get shares redeemed for physical gold. Gold is disappearing from GLD and the markets. I don't think you need many more clues to figure out who is getting gold.
That being said, I doubt GLD has more than 10% of what it claims to have. So the brick wall on the draining the ETFs scam is probably close at hand. I don't think GLD or SLV can ever report a physical drawdown of more than 15% from peak.
Time for the chancellor of the Exchequer to pre-announce the amount, price and date of the next 400 metric tons of gold, to bail out JPM?
It is paper gold, who fucking cares?
ETF = Evil Thieving Fuckery.
Those damn Equity-Transfering Fornicators!
Ok., so they tell us they are selling. Maybe they are. The real question should be who is buying?
Somebody's buying a hell of a lot of jan 2014 SLV 40 calls recently.
only use GLD to buy more of the REAL stuff. Nothing else.
i love Perth Mint. Damn are they sexy.
Would I believe the marginal 140 tons of gold sold would drive the gold price down? Yes. That's because price is set on the marginal buyer and seller.
If people are leaving the gold etf, forcing the fund to sell, I'd expect that to lower the price. Especially if there are no marginal buyers to pick it up.
More sellers than buyers = lower price.
More sellers than buyers = lower price.
************
You can't have more sellers than buyers-
All you can have is more bullish/bearish buyers/sellers--sentiment is the only factor in rising or falling prices-
Wow. I say "wow", because both statements are utter bullshit.
Just like "constant inflation-adjusted prices prove that there is no inflation", right Jimmy?
How about having five sellers who each sell one unit of an asset, with one buyer buying all five of those units. Impossible? Or merely beyond your incredibly limited comprehension and imagination?
You really are quite a moronic, and amusing, simpleton.
How about having five sellers who each sell one unit of an asset,
***********
Sure you could have that scenario-but the bottom line is--"one" share sold and bought---the topic was GLD which trades exclusivly in "stocks"
For every seller there has to be a buyer-no? and it has no effect on the price of that one share-like i said--it depends on sentiment-
If only one share sold out of a 1 million share pool for a price higher than the last close-999,000 shares are now valued at that last price--where did the money come from to boost all those non traded shares?
Do you not even understand how a stock market functions...
"Constant inflation-adjusted prices prove that there is no inflation".
A phrase which will live in infamy!
LOL
.
Such a tautological Tilt-A-Whirl® makes AnAnonymous, in comparison, appear cultivated and erudite.
It is, indeedly, a metaphorically malodorous dropping of roadside crappery of the first rankness, a titillatingly taut tautological turd of fabled offuscationalizing US deflationism.
Constant inflation-adjusted prices prove that there is no inflation
*******
http://www.jparsons.net/housingbubble/
Here's the same chart that you and your clueless minions are trying to make mileage out of-
Tell me again why inflation adjusted and nominal prices have pancaked and why during the period to about 05 the spread was so wide-which is what i asked you to explain before--also AK--explain to everyone how 5 people holding one share out of a share pool can sell to one buyer and somehow prove that there are more more sellers than buyers of a single share-where does a person find the data for that?
Jimmy, I used to think you were merely ignorant, which is not necessarily a fault, but it has become more than abundantly obvious that you are both ignorant AND terminally stupid.
Given these facts, trying to beat any sense or logic into your woefully inadequate mind is as futile, and pointless, as trying to make AnAnonymous comprehend or admit that his tirades against "US 'american' citizenism" are nothing but pure and blatant bigotry. I refuse to continue trying to plow the sea, either with you or with him --- people as profoundly stupid, and glaringly dishonest, as the both of you are simply not worth the effort.
I refuse to continue trying to plow the sea, either with you or with him --- people as profoundly stupid, and glaringly dishonest, as the both of you are simply not worth the effort.
*************
LOL--what a dodge--backed you into a corner and as usual--AK comes up empty-
I hate to quibble but people refer to a sell-off as a cause of a drop in a price. For every sale, however, there is a purchaser. One could accurately say that there was a mad scramble for ETF gold.
So price drops aren't caused by people selling?
No. The offered price can fall with no sale. Prices are set by bids and offers. Not by actual sales.
Like COMEX futures when they pull the bids and run the stops?
Some of these comments amaze me. Almost like some people have never read anything on the gold and silver market yet offer up the ridiculous sounding explanations to the blatant suppression of precious metals.
The offer is the person selling. When you have more offers at a price than bids, the price falls.
It doesn't get anymore simple than that.
Shouldn't it be a comparison of the ETF gold sold with the amount of the physical gold transacted in the same time period? Or even phyz + paper, in order to have an apple to apple comparison with the USD example presented?
Does anybody have a good recommendation for junior miners?
read moriarity at 312gold. he made the comment, that you know the juniors group is overheated when projects with no studies are bid up over projects with quantified reserves. but not there yet
Great site! I just discovered Darryl Robert Schoon on this website. He is very informative and correct in his observations.
Ok, thanks!
+1 Bob @ 321gold. Balmoral Res. Novo Res.
it's 321gold and Moriarity pitches his book.
Divergence is starting... Physical market is drying out. We are pricing physical inventory more points above paper vs few months ago. Some other dealers are started to following the suite.
not to mention the drop in gold mining ETFs which don't hold any gold whatsoever. the secret which has always been in plain sight, is that gold tracks the major stock market indexes. (since 2008 the DOW is down 50% vs gold, i prefer to think the market has underperformed the leading indicator, just like Google might trail Apple)
more of the secret in plain sight, there is no spec, or speculative trade, in gold. gold has just been a sleepy indicator which tells the world what the USD is worth. that's all. this is good news for gold bugs.
the third secret in plain sight, is that gold has never been in a bull market (in modern times) there have been some high times, but usually short runs up and long long bouts of selling and decline. that's all about to change. twenty years of monetary blowback, at least, a bull market for gold, which started probably in 2008. and i would say own the miners because they will dig everything up, which will dilute the price of existing gold somewhat. and as poor people in Asia take gold off the market, (thank you thank you) the price will go up.
the fourth secret is no secret, but gold on weakness. that is all
It would be nice if those who comment here, or those who write articles for zero hedge, had a clue as to what they are talking about (such as how ETFs work), but I guess that's expecting too much in this day and age. Physical gold generally leaves an ETF in one of two scenarios: 1) when sellers of the ETF shares (for instance, a hedge fund exiting a short-term gold trade) push the ETF share price below the spot gold price, enabling an ETF Authorized Participant - Barclays Capital Inc., CitigroupGlobal Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs &Co., Goldman Sachs Execution & Clearing, L.P., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc.,Merrill Lynch Professional Clearing Corp., Morgan Stanley & Co. Incorporated, Newedge USA LLC, RBCCapital Markets Corporation, Scotia Capital (USA) Inc., UBS Securities LLC Virtu Financial Capital Markets LLC - to buy ETF shares, exchange them for physical gold, and sell the gold in the market, making a small profit, or 2) an Authorized Participant wants physical gold, and either buying ETF shares and exchanging them, or exchanging already owned ETF shares is the cheapest way to get access to a large amount of physical gold.
To reiterate: GOLD LEAVING AN ETF HAS NOTHING TO DO WITH PRESSURE ON THE PHYSICAL GOLD MARKET (if there is pressure in the physical market, Authorized Participants buy physical, exchange it for ETF shares, and sell the shares, making a profit), but rather has to do with pressure in the paper gold ETF market.
Gold's rise will turn futures market into cash market, Sinclair says (2013-03-06)
The gold futures market won't collapse, gold trader and mining entrepreneur Jim Sinclair tells King World News today, but rather will impose ever-larger margin requirements as gold rises and forces the paper market to become a cash market. The price suppressors, Sinclair adds, ARE MESSING WITH RUSSIA AND CHINA and will be overpowered by demand for real metal. And recent gold price fluctuations, he says, indicate that the near-term bottom is in.
This strikes your secretary/treasurer as Sinclair's most incisive interview yet and probably as incisive as any interview given in the gold market in the last decade. How nice -- like essential -- to have this guy on our side. An excerpt from the interview is posted at the King World News blog here
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
that was how they broke the Hunt Brothers, wasn't it?
Further from Jim Sinclair: “The market character has now changed for gold and very few recognize that. Gold is a trading market which involves sovereign entities, very serious sovereign entities such as China and Russia. Recently you can even see the minor central banks such as South Korea purchasing gold.”
Sinclair also added:
“The character of what’s in this gold market is so different from the bull market of the 1970s. The bull market of the 1970s was mostly traders and some central banks, but there wasn’t a huge sovereign interest.
What you are dealing with now is China and Russia, who are doing what they are doing in terms of accumulating gold because they know the end game. The manipulators of the market will come face to face with that physical reality. When they mess with these markets now they are playing with China and Russia.”
and that is why before the truth will come in the daylight for all, the WWIII will start
My studies indicate gold could drop $200.00 next week. Just bought April 1500 puts for 2.50 and will sell at 98.00 or friday March 15 near the close.
get back to us on how that turns out
Current gold price action is simply the inverse of the USD index.
"Nothing to see here move along."
Soo, where's the dip if people are dumping that much gold ?
JIM WILLIE: GRITTY QUESTIONS ON THE HISTORIC COLLAPSE
"More than a crisis, it is more accurately described as a collapse of a corrupt inequitable monetary system, and a desperate defense by the major Western bankers to preserve their power over nations and their governments, alongside a vile vicious violent attempt by the United States to maintain its privilege as owner of the vast USDollar counterfeit machinery, as controller of vast banking pillars of paper columns, and as commander of a vast military."
12) HOW WILL THE COMEX SUFFER A FINAL SHUTDOWN ??
The COMEX will be drained eventually of its Gold & Silver inventory. They had to resort to stealing 140 thousand accounts at MFGlobal in November 2011 in order to preserve its inventory. Do not be surprised if the Libyan 144 tons of liberated gold found its way to the LBMA and then COMEX. The two crime events should indicate the final stages of desperation. The COMEX has resorted to regular raids of the GLD & SLV exchange traded funds over the last two to three years, in greater recent volumes. They short the ETF shares, a privilege granted only to the big banks, then arrive to cart off bullion bars in overnight shipments. Also, vast supply routes have been established between the LBMA and COMEX, with help from the Swiss castles situated at the Bank For Intl Settlements, and from the Roman Catacombs, where decades of cooperation have been afforded. The armored shuttles have been at a frenetic pace to avoid defaults, especially in Silver. The most recent element has been the solicited aid of Scotia Mocatta, the Canadian pillar which appears to have joined the big US banks in naked shorting. The COMEX will shut down from a vicious combination of absent inventory and thin ranks of brokerage accounts. The players have left the COMEX, after the MFGlobal thefts which were endorsed by the corrupted US court system beholden to Wall Street objectives. All across the United States, compliance departments have banned usage of the COMEX by futures risk management teams. Empty shelves and no traffic.
Read the rest here.
"FINAL SHUTDOWN" or "Final COUNTdown"? /sarc
Damn these ETFs. They were created in part to drive investment money away from the mining stocks. Before the ETFs, mining stocks got all of the action {in the paper world}. The ETFs can't go away soon enough. Their demise will go a long way to returning a measure of honesty to the market.
I always thought Exchange Traded Funds were created by futures' traders so they wouldn't have to work outside jobs as bartenders or sheetrock hangers in their spare time.
Judging by the lil' old coin shoppe on the corner there is plenty of demand @ current price ... sold out!
People should come to their own conclusions about assets, but a correction to $1350/oz would be equivalent to the correction in 2008-09.
Persistent outflows indicate, contrary to conventional wisdom, great avidity for physical gold and/or a restriction of supply for physical gold, as explained here:
http://www.dowtheoryinvestment.com/2013/02/dow-theory-update-for-feb-21-...