The Last Time Gold ETF Flows Were This Strong, The Fed Was Starting QE

Tyler Durden's picture

The cracks are starting to appear in the 'paper' gold market.

BlackRock's rather shocking decisision to halt ETF creation due to gold demand (i.e. being unable to source enough physical gold to meet mandated requirements given the inflows) follows the largest gold ETF inflows since Feb 2009 (just as The Fed started QE1 and unleashed trillions of freshly digitized exuberance into the markets).

 

As BloombergBriefs reports, investor flows into the two largest gold exchange-traded funds topped $5 billion for February.

State Street’s SPDR Gold Shares ETF attracted $4.186 billion for the month and BlackRock's iShares Gold Trust fund raked in $887 million.

 

The last time flows were higher the S&P 500 had fallen more than 18 percent for the year and the U.S. Federal Reserve was just three months into its first quantitative easing program to stimulate demand and shore up the financial sector. That was February 2009.

In fact, transparent gold holdings across all instruments has been soaring since the start of 2016.

Source: ShareLynx.com

Given these extremes in demand, and clear signals of discontent with the monetary and fiscal authorities, Casey Research's Justin Spitttler had some interesting perspectives on what could happen next...

If you’re buying gold right now…the government could be tracking you.

If you’re buying gold, you’re likely not doing it to make money. You’re buying it to make sure you don’t wake up poor one day.

Gold has been used as money for thousands of years because it is easily divisible, easily transportable, has intrinsic value, is durable, and has consistent form around the world. And, as Doug Casey reminds us, it's a good form of money because governments can’t print it on a whim. You can't “Bernanke your way” to wealth with gold.

When today’s dramatic central banking experiment blows up, gold will hold its value…unlike paper currencies such as the dollar.

That’s exactly why the government will try to take it from you.

The last time the government confiscated gold was during the Great Depression. In 1933, President Roosevelt outlawed owning most forms of gold. He claimed that people “hoarding” gold were making the Great Depression worse. The penalty for not turning your gold in to the government was a $10,000 fine and 10 years in jail.

Of course, Roosevelt gave his closest supporters notice before issuing the ban. They had time to move their gold to another country. Most folks weren’t that lucky.

This time around, the confiscation will be digital.

Most people own gold through a fund like Sprott Physical Gold Trust (PHYS) or Central Fund of Canada (CEF). The former will give you physical gold in exchange for your shares, once a month, if you own enough shares. The latter won’t give you the physical gold.

Because this gold is owned through a brokerage account, it will be easy for the government to confiscate.

What about physical gold? If you bought it from a dealer and paid with a wire transfer, the banking regulators have plenty of documentation. They’ll likely let you keep the gold. But it will be illegal to trade. If you don’t obey, you’ll be subject to a 99% tax on its value.

But there’s one way to buy gold so the government can’t track you. I’ve been doing it for years. You can do it, too. It’s buying at a locally owned jewelry store. These stores get a few common gold coins in every week. If you know what you’re looking for, it’s a great way to buy gold with cash.

However, the window of opportunity is closing quickly. In fact, I went to buy gold today…and saw this new sign.

It says, “CASH transactions are limited to $6,000 within a 48 hour period.”

$6,000 seems like an arbitrary number. And 48 hours seems even more contrived. This is a sign of the times. Governments are cracking down on cash. They want to know every detail of your financial life. They want to know what you buy and what you sell.

Paper cash is hard to track. So, little by little, governments are getting rid of it. Notice the $500 bill featuring President McKinley to the left of the sign. Years ago, $500 bought you a brand new car. Today, it barely buys a steak dinner for a family of five.

Cash is on its way out of existence. The government stopped issuing $500 bills in 1969. Last week, Harvard professor Larry Summers wrote an article titled “It’s time to kill the $100 bill.” The New York Times published an article arguing the same thing. Their reasoning is, big bills make it easier for criminals to commit crimes. If you’re not a criminal, you shouldn’t have a problem with the government knowing everything you buy and sell.

The $6,000 limit will soon be $1,000. The local jewelry shop is the last place you can buy gold without the government tracking you. Take advantage of it while you can.

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nope-1004's picture

ETF's and futures prices are a 100% fraudulent pricing mechanism, the intent of which is to control the price of gold, not accurately reflect price the underlying asset as they say it does.  This is one of todays biggest financial lies.

Armstrong has a different view though.  Maybe being incarcerated has something to do with it . . . . .   lol

 

KesselRunin12Parsecs's picture
KesselRunin12Parsecs (not verified) nope-1004 Mar 5, 2016 1:59 PM

"Maybe being incarcerated has something to do with it . . . . .   lol"

 

Actually, I believe that being UNincarcerated has something to do with it... ;-)

Never One Roach's picture

We're going to see gold drift up to $3,000 or higher with all the printing again as well as the Chinese who are loading on gold since their gubmint is succeeding on blocking more then $50k from leaving the country. Realtors in seattle are squealing their Mainland clients cant get that $10 million out to buy that bungalow.

remain calm's picture

Casey is a fucking moron. If the government says you can keep your physical and will not be able sell it without paying 99% tax or worse make it illegal. What the fuck does it matter if you bought it from the local coin dealler or the Mint. He didn't think that one through or maybe he is getting a little demented. Plus once the government starts buying my gold held at Sprott they will be paying a much higher price than I paid and the panic may be mostly over by then, and I don't think they will be able to recover the gold I lost in the bottom of the lake last year. Fuck you Janet.

Buckaroo Banzai's picture

Casey kind of misses the point. If the Feds try to outlaw gold-- either directly, or indirectly via some sort of punitive tax-- then it will simply move to the black market.

Now you can say, "well, they will then outlaw cash in order to cripple the black markets". The problem with outlawing cash is, it ruins the illegal drug trade. Since the banking system is critically dependent on drug money laundering cash flows, it would be suicidal to eliminate cash. Furthermore, the Feds are directly involved in the drug trade about half-a-dozen different ways-- so there's no way they impede that business.

The Feds would literally have to legalize all drugs before they could even think about eliminating cash-- and there are a LOT of people who like the status quo on drugs just as it is, and these people tend to be very comfortable using violence to get their way.

philipat's picture

@BB Agreed, the grey market will take over and barter will represent an increasing, untaxed, portion of GDP. In this respect also, one must ask the question "what cash"? So long as other countries still print cash (SFR, EUR, JPY, GBP, CNY etc) these notes will replace USD in the barter economy AND the USD will accelerate downwards as the reserve currency. These fuckers never think outside any box other than their own.....

daveO's picture

https://en.wikipedia.org/wiki/Illegal_drug_trade#Profits

"In December 2009 United Nations Office on Drugs and Crime Executive Director Antonio Maria Costa claimed illegal drug money saved the banking industry from collapse."

Also,

The last time flows were higher the S&P 500 had fallen more than 18 percent for the year and the U.S. Federal Reserve was just three months into its first quantitative easing program to stimulate demand and shore up the financial sector. That was February 2009.

The market is discounting an easing that hasn't even happened yet and probably won't until a lot of those $2.35 Trillion excess reserves are used up.

Kirk2NCC1701's picture

They'll just hand the Drug Trade to the Pharmaceutical industry, and legalize all drugs.

Expect to see them marketed on TV, alongside Viagra, etc. Think of all the DUIs that will then be issued, to keep the Prison industry going.

As soon as The Wall is up, expect the new rhetoric and spin to start:

"Drug imports will be controlled and managed, to prevent funding (unregistered) criminals and (unsanctioned) terrorists. Certified drug companies, that employ Americans and pay taxes, will protect Consumers (ex-junkies) from poor quality and dangerous substances."

Many of you are such linear thinkers and have so little imagination. [sigh]

cougar_w's picture

The Fed cannot do another round of QE until after the elections. Period. They will have to do something else, something that might play even better.

I think it's going to be helicopter money. Huge give-aways for the poor (who need to spend money) like a living-wage stipend for every one (reverse income tax) and maybe some little something for the middle-class (student loan forgiveness at least because the colleges will want it, but probably actual income too). The idea being to get money moving on Main Street in the run-up to November.

After November you can all fuck off.

besnook's picture

actually the zionazis are looking for a clinton regime in the fall because she is the only one pledging to do their bidding. the market cannot fail until after november and likely not until spring of 2017. if you want trump, a market collapse will landslide him into office.

KesselRunin12Parsecs's picture
KesselRunin12Parsecs (not verified) besnook Mar 5, 2016 2:05 PM

I agree with cougar... FFS, they let "W" give a handout right before he left... Why wouldn't they let "O" do the same (maybe even larger)

 

As far as WHERE gold or silver go in a 100% manipulated market (whereby, whether u like it or not, the MANIPULATORS still have control of the manipulating), WHO KNOWS?

 

I guess they're gonna have to fish out Bin Laden's body from the Indian Ocean & kill him again (what's he on, like, his 4th life already)?

Never One Roach's picture

One of the [dozens] of promises Soweto Obama reniged on was to give every American $3k for any "thingamajig" they wanted.

besnook's picture

so, using .gov's logic, along the same lines of the logic that says you shouldn't be concerned with .gov spying on you if you have nothing to hide, you are a criminal if you use cash because only criminals use cash.

someone put these guys out of our misery, please.

RAT005's picture

Or maybe only more wealthy people use cash, poorer people use credit.  If gov wants to steal money, go where the money is.

besnook's picture

just like japan found out nirp leads to hoarding cash at home, the dumbfuck anti cash people will find all sorts of alternative mediums of exchange will arise, from digital tally sticks to bitcoin and plan old barter.

wmbz's picture

Did Roosevelt "confiscate"  people's gold in 1933?

 

.

 

      "The last time the government confiscated gold was during the Great Depression. In 1933, President Roosevelt outlawed owning most forms of gold. He claimed that people 'hoarding' gold were making the Great Depression worse. The penalty for not turning your gold in to the government was a $10,000 fine and 10 years in jail."  ~L.B. Tucker, Casey Report  

   It bothers me to see so many writers suggesting that since the government "confiscated the people's gold" in 1933 it may do it again. The big point that's overlooked is;  EVERY OUNCE TURNED IN WAS PAID FOR IN LAWFUL CURRENCY OR SILVER COINS.  At the time the going rate for a troy ounce of gold was $20.67.  

   Gold coins were circulating money at the time.  Just as Congress eliminated silver from circulating coins just over thirty years later,  it chose to remove gold from circulation in 1933.  It was piled up in the treasury and soon revalued to $35.00 per troy ounce - devaluing the U.S. dollar by some 40 percent.  At no point did the government ask people to turn in their gold rings, watches, necklac3s, etc. 

     Gold was money then - it isn't now.  Moreover, the U.S. Mint is selling bullion gold coins containing a troy ounce of the precision metal for more than $1,000.00.  t is unlikely officials would sell you a coin for $1,000.00 + and then demand you turn it in at a bank for free.  The fact is, from a legal standpoint the U.S. government has no more claim to your gold than it has to your wrist watch of gold wedding ring.  

      Today people who tuck a few bullion coins in a sock drawer are called "hoarders."  In our youth "hoarding valuables" was considered "saving for a rainy day."

Amalgamated Tang's picture

EVERY OUNCE TURNED IN WAS PAID FOR IN LAWFUL CURRENCY OR SILVER COINS.  At the time the going rate for a troy ounce of gold was $20.67.

You do see the foolishness of your statement, actually the three or four foolish statements?

1. If the gold owners had wanted another lawful currency or silver coins, they could have traded their gold on their own terms. They were coerced with the threat of prison. You realize that is a form of extorsion?

2. At the time the rate was $20.67. True, but FDR knew he was going to devalue the dollar by 70%. That's essentially insider trading. The gold owners were defrauded out of a 70% windfall in dollars.

3. Gold was and is money. The proof is in the Constitution. FDR or Obama can certainly request a change in that passage of the Constitution, but that requires a Constitutional Amendment, and no such Amendment has been proposed or passed.

4. The people were hoarding gold because gold is a protection for wealth in a crisis. In 1933, the people were in the 4th year of a crisis. They were visionary and had made a sacrifice at some earlier point to trade "easy to spend" cash for inconvenient gold. We live in a society were "smart and visionary" are supposed to be respected. Instead, they were punished. They lost the wealth they could have spent. They lost the wealth they had. And they lost the wealth that FDR's inflation created.

If you endorse that brand of government crime, you don't belong in Fight Club.

wmbz's picture

If you endorse that brand of government crime, you don't belong in Fight Club.

"Endorse" who the fuck said anything about endorsing anything?  Facts are facts look it up, don't make it up.

Deathrips's picture

It was voluntary stupidity that netted the government gold in 1933. How many people went to jail for keeping? None cause it was fraud. If the government outlaws having a set of testicles...you are an idiot for cutting yours off. Gold and silver are a store of value created...so your life.

Govt says give us your "life" savings, what kind of idiot gives them their saved life.

I personally lost my life savings when i forgot to put the ebrake on in my van down by the river.

Look it up, dont make it up.

 

RIPS

Mr. Universe's picture

Do you ever wonder why a 1oz Gold Eagle has a face value of $50?

Sir SpeaksALot's picture

gold has  alot of QE $trillions to catch up with.

Rock On Roger's picture

A couple times a year I take my wife to the jewelry store in the Indian part of town. She likes helping me stack with wearable 22 carat gold. She doesn't complain when I go to the LCS with a wad of currency and come home with a shiny stack of bullion.

 

 

 

 

booboo's picture

when they come for your shit tell them that another government agency already came and took it, "they had scarey guns, jack boots and black vehicles just like you guys do and no they did not leave me a card or give me a receipt they just made us sit nekked in the yard while they loaded everything"

Trust me on this, they will believe every word because that is what they would have done and it is a free for all jack boot fest amongst the hundreds of agencies in government and none of them want lines of communications to each other.

cougar_w's picture

Maybe in a few decades. But when they do come just as you say, they won't be government goons but elites in the criminal class. We are headed into a lawless time, "strongmen" will run everything in America in the same way they do everywhere else in the world, and for the simple reason that they don't mind killing people. They will buy military hardware (and former soldiers) form private armies take over "government" and the courts, and just run things however they want.

That will be out modern feudalism. Anyone not at the top will be left with nothing. Absolutely nothing.

Caviar Emptor's picture

You will have to swear loyalty to your local chief. Most of what you earn will be taken as "tribute". Families will hope their kid becomes a soldier and rises to lieutenant. But you won't need to worry about locking your car.

Tinky's picture

I don't see that happening. It seems to me that the elite require a much bigger security blanket than mere mercenary bodyguards.

In the U.S., that blanket remains wide and deep, given the millions of civil servants and bureaucrats who are either directly or indirectly sucking on the .gov teat. As long as they are, as a group, backing the system, it will be very difficult to affect the type of radical change that is so badly needed.

When that group does splinter and fall apart, however, I don't see much time passing before those at the top of the chain become the hunted.

Kirk2NCC1701's picture

Please, nigga, no talk of Double Penetration here.

Strelnikov's picture

Just to be sure this works, go out and take naked pictures of your family on the lawn now.  You can then whip them out at the appropriate time.  Also, the neighbors are having a slow weekend.

Boondocker's picture

If it isn't in your possession,  it's just paper

Chia-Pet's picture

Gold is dead. The gov can't make any money off of it.

Black gold will be always be king. Big downslide last year is this year's ramp to Trump because he will tell Saudis and Iran to fuck off. Noth America will form it's own OPEC and not buy any foreign oil. Noth American oil market - NOAM. Hell, just build 2 walls and unite. Amerimexada!

Look at Mad Max moovie, always fighting for fuel. Or was it water? Maybe they needed fuel to chase the water? To pump the water? Same with Waterworld movie where dirt was money.

Most post armageddon movies never have folks fighting over gold. It's something more valuable.

But I guess we don't live in a movie. Things just happen randomly.

Tinky's picture

Should you ever find yourself in need of a job, I'd strongly suggest that you skip the ads seeking film critics, screenwriters, and economic forecasters.

Chia-Pet's picture

LOL will do.

Movies about future, no gold.

Wait until nexy week when thay start talking about raising rates and oil continues up. Gold will be south.

Any shit storm in the middle east cutting off oil production (false flag alert!) will git that there black gold price up above 50...60...

No TPTB is benefitting from low oil prices. 

Deathrips's picture

Cramer...is that you?

RIPS

Strelnikov's picture

It's hard to deny the wisdom of a big budget flop like Waterworld.

Budnacho's picture

Riiiiight...My bet is they'll implode LONG before I have Agent Smith at my door...

Trump is making them collectively shit themsleves and you think that the Govt will come for your shit?...guys, they ain't that clever.

When the hammer drops all of them that also hold gold won't want it to be worth zero etc...so think about it, what would crack first?...their bullshit in the face of a heavily armed nation...or their futile attempt to pull this shit off?

Kirk2NCC1701's picture

Perhaps. But don't neglect the author of "The Art Of The Deal" to deal himself into the Circle of The Club.

Don't forget that his daughter Ivanka has already joined The Club and is about to pop out a new Member. And don't underestimate their ability to entice him, the same way they accepted or enticed O.

Will he or won't he? Time will tell. But they won't.

I'm not as gullible as GOP 'Murikans with Trump Fever, even though I'm rooting for him.

Silverhog's picture

If the Feds come to take your Gold, what will keep them from taking your home, land or whatever else of value. Anything resembling a civilized world will have all ready ended by then. 

Strelnikov's picture

Well, I think I can put the first couple down.

yogibear's picture

If the Feds come to take your Gold, what will keep them from taking your home, land or whatever else of value.

Some guns, ammo, a can of gasoline and a matchs.

 

Mr. Universe's picture

They are going to need Captain Nemo to find most of the PM's around these parts.

flaunt's picture

I agree with most of the points made in this post, but to be fair about the reason Blackrock gave for suspending share creation, it had nothing to do with being unable to acquire physical gold.  They say that it's because the surge in demand for IAU shares caught them off guard and they didn't register additional shares with the SEC in time to meet the demand from investors.  Whether that's true or not is irrelevant, the point is, we should expect both sides of the story to be represented so that readers can be more informed and make better decisions for themselves.

http://www.bloomberg.com/news/articles/2016-03-04/blackrock-temporarily-...

 

Anopheles's picture

But it's so much more inflammatory to say they couldn't find any gold. 

Bay of Pigs's picture

Do you really think GLD was able to add that much physical gold in one month? ($4.186 billion)

If so, you are a special kind of stupid.

flaunt's picture

I don't know exactly how it works, but GLD doesn't physically go out and "get the gold" itself.  There are a number of "authorized participants" who make money when the inflows to GLD cause it to increase over the NAV, they are allowed to profit on that difference by immediately issuing and selling new shares and transfer ownership of the physical gold they own to the GLD custodian.  It's very efficient actually, on paper.  Whether this is really going on behind the scenes is anyone's guess, but they try to make it transparent.  They update a list of all the gold bars they claim to have every day: http://www.spdrgoldshares.com/usa/gold-bar-list/

Physical gold is not riskless, neither is an ETF like GLD.  The risks are different, and an intellgient person can figure out how much they want of each one if they understand how it works.

 

Bay of Pigs's picture

HSBC is the custodian of GLD. Do we really need to address the honesty, integrity and legitimacy of this corrupt, fraud ridden, money laundering operation?

Most of us here are intelligent enough and understand the "risks" trusting a bank like them when it comes to buying and holding gold.

Anopheles's picture

Same old rhetoric from Piggy.   Never has an original idea in his head, and to him, everyone else is stupid.  

 

“When the debate is lost, slander becomes the tool of the loser."

- Socrates

 

There's LOTS of gold in bank reserves all over the world.   Just pay a few dollars above spot and you can get ALL you want. Plus, there's almost 9 tonnes of NEW gold produced EVERY DAY.   

 

Special kind of stupid is for people like you who think there's a shortage of gold. 

Bay of Pigs's picture

Deflect, distract, obscure. Care to actually "debate" the facts on GLD and HSBC or just talk out of your ass?

It is not surprising that you never answer the question put to you.