Unencumbered GoLD

After yesterday's nearly 17 metric ton withdrawal, it is becoming increasingly clear that a global movement is afoot to hoard massive amounts physical gold. Today, let's try to put all of this into perspective.

As you know, we've been actively chronicling the "investor liquidations" of the GLD. Of course, that's the popular SPIN. Supposedly, investors worldwide are reallocating assets out of precious metals and into equities.

On 1/2/13, the GLD allegedly held in "inventory" 1,349.92 metric tonnes of gold. By the end of January, that figure had fallen to 1328.09. By 2/28/13, the reported "inventory" was less than 1,270 metric tonnes and by late March it had fallen to 1,222 metric tonnes. And now, in April, we're rolling. Down over 35 metric tonnes month-to-date.

Yesterday alone, the GLD reported a total withdrawal of 16.84 metric tonnes of gold. This brings the total "gold" in "inventory" down to 1,183.53 metric tonnes. Year-to-date, the GLD "inventory" has been depleted by 12.33%. Stated another way, for every eight bars there used to be in "inventory", there are now seven.

Now, let's try to put this into perspective. Yesterday's withdrawal of 16.84 metric tonnes is 541,418 troy ounces. A London Good Delivery Bar is 400 troy ounces, so yesterday's withdrawal represented roughly 1,353 bars. The image below is of a pallet holding 192 gold bars.

The total withdrawal of 1,353 bars would look like this:

As Ruprecht would say: "That's a lot." But we're just getting started! As stated above, GLD has shed about 35 metric tonnes just this month. That's seven more pallets!

Now we're getting somewhere. According to the World Gold Council, 35 metric tonnes (those 14 pallets of gold) is about how much is owned by the Ukraine or Malaysia. And the GLD spits out that much in just eight business days due to "investor liquidation".

But let's not stop there. The cumulative withdrawal YTD is 166.39 metric tonnes. That's 5,349,562 troy ounces! On the pallets above, I've only shown you about 35 metric tonnes. For the total GLD withdrawals YTD, we have to add another 56 pallets or 10,686 bars or 4,274,362 ounces!

And again, we are told that this is all due to "investor liquidations". Let's stop there for a moment. Call me crazy but wouldn't you think that an "investor" who is "reducing his/her investment allocation in precious metals" would also be dumping silver? I mean, silver's a precious metal, too, isn't it? Hmmm.

Well, let's look at GLD's little brother, the SLV. On 1/2/13, the SLV reported an "inventory" of 10,084.96 metric tonnes of silver. As of last night, the SLV showed an "inventory" of 10,497.59 metric tonnes of silver, UP 412.63 metric tonnes YTD or almost 4%. WHAT?? Wait a second. That can't be right. My math must be wrong. GLD has shed 166 metric tonnes of gold YTD...more than the entire holdings of Thailand or Singapore...but, over the same time period, the "inventory" of the SLV has grown?? YEP!

Now, you're probably thinking: "I remember something earlier this year about a massive, one-day addition to the SLV". Yes, you do recall that. Here's a link: http://www.zerohedge.com/news/2013-01-17/slv-etf-adds-record-572-tons-silver-one-day-more-all-2012 Of course, 10,000,000 ounces or about 311 metric tonnes of silver were almost immediately withdrawn and shipped off to JPM's new vault: http://silverdoctors.com/18-3-m-oz-slv-deposit-jpms-new-silver-vault-jpm-discovers-way-to-bypass-comex-re-entry-process/ And we also saw a huge, 5,800,000 ounce (180 metric ton) withdrawal back on Friday. Even taking all of these shenanigans into account, the SLV "inventory" is still up YTD. So, again, I ask the question: If investors are liquidating the GLD due to asset reallocation, why aren't they liquidating the SLV, too?

Could it be that maybe, just maybe, the drop in GLD "inventory" isn't related to "investor liquidations" after all? Maybe, just maybe, were are instead seeing a conversion of paper shares into physical metal for delivery? Of course maybe, just maybe, even these withdrawals are just book-entry, unallocated "credits". Read this from page 18 of the GLD prospectus:

"Prior to initiating any creation or redemption order, an Authorized Participant must have entered into an agreement with the Custodian to establish an Authorized Participant Unallocated Account in London, or a Participant Unallocated Bullion Account Agreement. Authorized Participant Unallocated Accounts may only be used for transactions with the Trust. An unallocated account is an account with a bullion dealer, which may also be a bank, to which a fine weight amount of gold is credited. Transfers to or from an unallocated account are made by crediting or debiting the number of ounces of gold being deposited or withdrawn. The account holder is entitled to direct the bullion dealer to deliver an amount of physical gold equal to the amount of gold standing to the credit of the account holder. Gold held in an unallocated account is not segregated from the Custodian’s assets. The account holder therefore has no ownership interest in any specific bars of gold that the bullion dealer holds or owns. The account holder is an unsecured creditor of the bullion dealer, and credits to an unallocated account are at risk of the bullion dealer’s insolvency, in which event it may not be possible for a liquidator to identify any gold held in an unallocated account as belonging to the account holder rather than to the bullion dealer."

If you ever want to read the entire thing, here's a link: http://www.spdrgoldshares.com/media/GLD/file/SPDRGoldTrustProspectus2012.pdf

Anyway, let's return to this "disappearing gold" idea. Did you see this story earlier this week? http://bullmarketthinking.com/comex-gold-inventories-collapse-by-largest-amount-on-record/ Year-to-date, the amount gold held on deposit for Comex delivery has declined by nearly 2,000,000 ounces. This sounds about right as The Comex delivered over 1,000 contracts in January, about 14,000 contracts stood for delivery in February and another 1,400 or so in the non-delivery month of March. So, how about some more pallets? Two million ounces is 5,000 bars. Once again, our pallets hold 192 bars so we need another 26 of them to represent the total Comex withdrawals for the first quarter alone.

And let's not forget the gold that is flowing out of London and Shanghai each day. Our man on the ground in London is Andrew Maguire. He's been trading and acquiring gold for over 30 years so, through his network of contacts, he's able to accurately estimate/measure the daily amounts of physical gold being allocated and delivered. Of course, the daily movements vary based upon price, discount to futures and day of the week. However, I asked Andy for an "average". What does he see play out on an "average day"? The numbers he provided are: 10-12 metric tonnes per day in London and 12-15 metric tonnes per day in Shanghai. Uh-oh. That's another 26 pallets and that's only for "an average day". And we're not even including Dubai or any of the other global centers!

You know, I could probably keep going and continue to copy-and-paste that stack all day long. (I bought the picture through Dreamstime so I can print it as many times as I'd like.) I think you get the point of this exercise, though. MASSIVE AMOUNTS OF PHYSICAL GOLD ARE MOVING AROUND THE PLANET, MORE SO THAN EVER BEFORE, AND CURRENT GLOBAL STOCKPILES ARE BEING DRAINED.

You're being told that the GLD is shedding gold and returning it to the Authorized Participants because "investors are re-allocating their portfolios away from precious metals". I'm sure some folks are so that's at least partially-true. But how do you explain away the fact that the SLV "inventory" is not down YTD? And where do you suppose all of that Comex gold went? And who/what is buying and taking delivery of, "on average", 20-25 metric tonnes per day through the world's physical delivery centers? And do you now think that gold at $1570 is expensive or inexpensive? Do you believe the "analysts" and "experts" who claim that gold is headed to $1300? Or $1100?? Or $800??? Are you going to side with The Sheep and The Paper Bugs and convert your metal back into fiat currency? Or are you going to side with whomever is accumulating all of this gold on a daily basis?

Additionally, do you trust yourself, your brain and your instincts? Do you wonder where all of is this gold is going? Are you curious as to why this is happening? Everyone from the financial media down to your friends and neighbors may not care. But you should. You most definitely should! And you should buy this dip. You should have bought the last dip. And you should buy the next dip. And every dip. And take delivery. While you still can and while there's still time.

TF

482 Comments

foscotanner's picture

1

maybe

silver66's picture

First

I am buying a lottery ticket on the way home tonight

My lucky day

Silver66

Edit

Aarrgghh foiled for first, I guess no lottery ticket LOL

marakai's picture

Wow

That's a lot o Gold, Oh and my first Thurd :)

Oldhat's picture

@silver66

yep your 1st, in your own mind, but don't look up!

(Everybody these days gets a star and a trophy).

Dr. Fix's picture

Fifth it is!

According to Father Bill's observations, at the end of the last thread, it is virtually guaranteed that we will all still be here tomorrow, he has looked into our future.

Therefore, I can say with certainty that the end of the world as we know it will not be today.

See you all tomorrow, (or maybe tonight).wink

Edit: I'm not sure how, but apparently  Turd got a picture of my stack.

All of that rehypothecation really makes it look good.

I am currently in the market for a rowboat so I can transport it all.cool

Iceberg Slim's picture

Top 10

For once..!

agNau's picture

Something to think about......

foscotanner's picture

first ever

my first ever first.

i think i sneaked it by virtue of typing very little. otherwise i would be second......

The Watchman's picture

Great Chart From Nick Laird-

WineGuy's picture

Pallet Of Gold Pics ...

Now that's some serious porn!

Dimeboy's picture

My Pallets

are empty, darn.

Nice firewood though!

Sad-descent's picture

Now NK is threatening to hit Japanese Nuke plants

http://www.japanherald.com/index.php/sid/213755737/scat/c4f2dd8ca8c78044

N Korean newspaper threatens to strike nuclear plants in Japan.

Bobbejaan's picture

Eurozone - Death by a thousand cuts

One of the best brief-analysis I've read recently :-

Quote:
The Eurozone crisis so far has resembled one of those cheesy fight scenes in a certain type of Hollywood movie. The hero is hugely outnumbered but each opponent patiently stands around looking menacing waiting to be ‘sorted out’ in turn.

Likewise Eurozone bailout candidates have lined up individually to face the Troika by rota and once ‘saved’ the ‘rescuers’ have sought to sing a little aria akin to the end of a Mozart opera noting how good has vanquished evil and all will be well in the world henceforth...Usually after an expensive meal in Brussels also paid for by EU taxpayers.

So, stage one of bailout mania was a process of Eurocrises in linear order, with nations bailed out to save their economies or indeed somebody else’s bankers...

The recent Cyprus process marked a watershed. It was a bail...well ‘bail-what’ one might ask? Cyprus marked a sort of hokey cokey dance of a ‘bail-’ process; altogether now: ‘you take one bail-in, you take one bail-out...you do the hokey cokey and turn around and that’s what bankruptcy’s all about!’ Cyprus endured a bizarre bailout farrago which damaged the trust implicit in previous EU statements of safety for savers.

The Eurocrisis has reached a new stage. Things have gone multilateral. First up are the existing bailouts. A progress report suggests all may not be quite on the road to recovery that has been previously reported by the EU. Greece festers in depression while Cyprus is a tinderbox of resentment to put it mildly. In Ireland, they want debt relief. Meanwhile in Portugal post court intervention, the government must immediately find an additional 1.3 billion Euros in cuts or face the consequences. Having already cut some 13 billion from the budget, this is, to put it mildly, a problem.

With Portugal on a precipice, the Mediterranean 500 lb gorilla nations do not look much better. In Spain the government have a massive majority but, like France, barely seem to grasp they are supposed to lead. As befits the land of Machiavelli, Italy has bypassed the leadership problem completely by failing to form a government at all.

At least we can sigh relief about stability when it comes to Germany as... No, hold on a moment. There is a ............

FULL ARTICLE :- http://rt.com/op-edge/eurozone-crisis-death-cuts-566/

.

John Galt's picture

Executive Summary of GLD Prospectus

Holding GLD = you're f*cked

thanks Turd.

dgstage's picture

Response to John Gault

I have a simple belief, a force majeure is in the making. The comex at some point will cease to exist and silver will be at at higher value. If not in dollars maybe Yuan, but I feel certain the barter/trade value will be much higher. Until then it is anyones guess.

Northern Border's picture

Wow ! Thats a great visual

Since we are getting pounded with a lovely spring storm here in Fly Over country, I decided to take an "Office day" 

How in the world does one "move" all those pallets of gold ?  You literally would need a fleet of armored cars to move it. 

I agree with the beleif we will have a force majeure, but the million dollar question is when ?  And what is the consequneces of such action ? 

NB

marakai's picture

@ Galt

Not holding Gold or Silver = Your F*cked....There fixed it for you.

freemarkettrader's picture

Looks like another raid planned for overnight

Turd, great post!

I am so weary of the way things are going.  Equities to the moon.  Gold and silver weak and the mining shares even weaker.  Good silver equities like AG and EXK are signalling another raid.  Silver flat for the day, but these shares are down 1% and 2% respectively on no news.

Sinclair (whom I have the utmost respect for) is confident that the bottom is in.  Me, I keep looking at the mining shares and they are acting like gold and silver will be attacked again.

billhilly's picture

Turd...

one of the best post's ever! Thanks

Xty's picture

Gold debt ratio

From 2011, so the numbers are a bit off, but selling all the gold ain't going to help:

 
Looks like Japan already tried.  UK, Ireland, Greece - almost all gone.  
Canada's holdings are so small we don't even make the grade.
Stack'em High's picture

GLD to SLV ratios

on 1/2/13 was 1:7.47

 
today it's 1:8.87
 
IF you believe the numbers.
If I recall, Sprott estimated that the available above ground ratio was 1:9.
 
So, at a today's price of $1564, could that mean silver should be closer to $176?
It's nice to daydream sometimes...
John Galt's picture

@ marakai re: clarification

Clarifying your correction : 

not holding phyz = you're f*cked

themagicbusguy's picture

Hey Turd

What are the chances that SLV has anywhere near the inventory they claim?  If the butcher runs out of filet you buy t-bone, right? And yet, the SLV cupboard is reportedly full.

GLD and SLV shares are to investing what pictures of food are to food preps.

MrGuboci's picture

thanks Turd for the visual experience

Longest thread YTD .

Road_Scholar's picture

Same amount of "real" gold on this post

as there is in all of Fort Knox and the NY Fed combined...

Arjen's picture

nice pics

Sure those bars and pallets are drawn to the correct size ?

At a mass of around 20kg/littre, 16.x tons of gold should be a bit short of 1 cubic metre. A full standard pallet is almost 1 cubic metre. ^^

dgstage's picture

Humor

The post today are funny. Mr. Fix also cracked me up at zero hedge with this statement.

Why do we have to wait till 1 PM to panic again?

Why wait?! We can just start panicking now and get it all out of the way.

Mad5Hatter's picture

Pussies Galore!!!!!

dude!!!! looks likes your a fat cat!!!! pussy up one of tem bars for auction!!!

Have personally assembled, 36 pals of Ag before, but that is wild. Woe is thy crimex.

I say we take off, and HAARPH the entire site for morbid, it the only way be sure.

abguy4's picture

A+++++++++++++++++++

Nice work Turdo~!

You made a stationary sorta video pictograghic so that everyone can grasp the idea.

Sometimes I think I'm shouting in the closet. At last somebody heard me. I posted essentially that thought 6 mos ago; No one responded, with even a single guess.....

"Who is sending all that tonnage and who is receiving it all. AND, why can't anyone produce a picture of the convoy of trucks that would have to be moving that tonnage daily? With all these guys who have studied PMs all their lives, (Turk, Sinclair, Casey, etc) NO one has the slightest idea of who the commercial carrier is, or who handles the transfers?"
SERIOUSLY???????"

I would add further; The bullion does not exist where they say it is - and furthermore it never did. Otherwise, where is the transfer system? Where is the 56 truck convoy - every day?

I think Turd took the Red Pill and has the answer above in todays post: "....Of course maybe, just maybe, even these withdrawals are just book-entry, unallocated "credits".

Just for the record I'm gonna state;

Turd has just spotted a huge glaring flaw, staring us all in the face all this time.

For all our lives (most likely) it has all been a huge Ponzi scheme. Book entries to cover book entries, to cover book entries...........................................................

Welcome to the matrix.

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