Fun with the GLD

As we close the books on 2013, I thought it would be fun to put the record-breaking plunder of the GLD "inventory" into perspective.

We spent a lot of time documenting the pillage of the GLD in 2013. Here are links to just a few of the biggest hits:

http://www.tfmetalsreport.com/blog/4633/enencumbered-gold

http://www.tfmetalsreport.com/blog/5167/pillaging-gld

http://www.tfmetalsreport.com/blog/5220/tale-three-etfs

Let's begin with the math. The GLD began 2013 with an "inventory" of 1,349.92 metric tonnes of gold. It finished the year with an "inventory" of 798.22 metric tonnes of gold. This brings the total 2013 plunder to 551.70 metric tonnes or 40.87%, roughly 17,737,567 troy ounces of gold. As Ruprecht would say: "That's a lot".

But...how much is it, really? 17MM+ ounces is a big number and difficult to comprehend for all of us with just a handful of ounces stashed away at the bottom of a lake. So, let's have some fun, shall we?

There are approximately 400 troy ounces in each London Good Delivery bar so 17,737,567 ounces gives us 44,344 bars:

There are 192 LGD bars on this pallet:

If we had to stack all 44,344 LGD bars onto pallets holding 192 bars each, it'd take a while as we'd have to load about 231 of them:

OK, now we're getting somewhere. But, I recognize that the visual above can be a bit overwhelming. Let's look at it another way. A standard LGD bar is about 200mm long by 80mm deep by 45mm tall. If you were able to take your 44,344 LGD bars and stack them on top of each other, you'd have a stack that reaches nearly 2,000 meters into the sky! For my American friends who never quite got a handle on this whole metric system thingee, that's roughly the height of FIVE Empire State Buildings.

But, you know, stacking LGD bars more than a mile into the sky would present a bit of a engineering problem. Let's say, instead, you took your 44,344 LGD bars and moved to Oz to be with your new girlfriend, Glinda. Once there, you find that The Great and Powerful Woody has recently signed the "Oz Recovery and Reinvestment Act", authorizing an extension of the famous Yellow Brick Road, all in a Keynesian promise to provide shovel-ready jobs for out-of-work Munchkins.

You and your little crew begin laying your LGD bars end-to-end. Ten of them make a row two meters wide, matching the width of the original YBR. You lay ten more in front of those and continue to do so until you've paved an extension that employs your entire stack of 44,344 bars. By the time you're done, you will have extended the YBR by a whopping 355 meters. Maybe not far enough to get you back to Kansas but at least you would be putting your barbarous relics to good, public use.

Anyway, that's all well and good but, by now, most everyone knows that most of the gold withdrawn from the GLD "inventory" is gone for good. It has been shipped to Switzerland where it has been recast into one kilogram bars with official Chinese insignia.

With the help of my pal, Andrew Maguire, we first broke this story back in June of 2012 and it has since become well-known throughout the blogosphere:

http://www.tfmetalsreport.com/blog/3924/gonefor-good

http://www.ibtimes.com/golds-journey-west-east-switzerland-1393831

And these Swiss refiners are now so busy that they can barely keep up:

http://www.ingoldwetrust.ch/alex-stanczyk-physical-supply-never-been-tighter

So finally today, let's try to visualize how much 17MM+ ounces of gold is after it's been converted into Chinese bars.

According to the Shanghai Gold Exchange website (http://www.sge.sh/publish/sge/hyfw/jyzn/5748.htm), a standard SGE bar is approximately 115mm long, 52.5mm wide and about 9.5mm thick. (Again, for Americans, that's about 4.5" x 2" x 3/8") I can't seem to find an image anywhere, though, so you'll have to picture it in your head.

Now, just for fun, let's do some of the same math...

551.70 metric tonnes of gold is equal to 551,700 kilograms. As the Chinese convert the LGD bars into kilobars this, of course, yields 551,700 bars. That was easy. What's not so easy is stacking them on top of each other again. If we were to manage to pull this off, our stack would be 5,241 meters high or about 17,240 feet. Wow!

And if we laid these bars end to end, they would stretch out into the distance for 63,445 meters or almost 40 miles! Put another way...It's about 17 miles from Victoria Harbour in Hong Kong to the Shenzhen coastline. If the bars could float, The Chinese could make pretty handy, little land-bridge out of them and use it to walk their bars into permanent custody in China.

I could go on and on and have fun with this all day but I think I'll stop here and leave you with The Biggest Question to ponder:

Now that the GLD has disgorged itself of all this gold...and now that so much of this gold is "gone for good"...from where will the Authorised Particpants of GLD source new gold to replenish the fund if demand for their paper product returns when paper price inevitably resumes it's bull market?

Hmmm. Maybe they don't have to worry about this at all? So far in January, the paper price of gold has rallied over 3% from $1202 to $1240. However, as of yesterday, this hasn't mattered much to the GLD. In 2014, it has already shed another 8.66 metric tonnes of gold from its "inventory", leaving it at just 789.56 metric tonnes and down over 1% for the year...and January isn't even half over.

As Sir Walter taught us nearly two centuries ago, "oh, what a tangled web we weave"...

TF

77 Comments

SilverRunNW's picture

OK, how many of you have been

OK, how many of you have been hitting the refresh button waiting for a new post and eagerly wanting to claim top spot? Come on, you know who you are.

Anyway, I believe we'll eventually break through the moving averages sometime before spring, but it will take a few attempts.  Hit, pushed backed. Repeat a few times, then blam! Of to the races.  I hope.

tyberious's picture

I want one

of the Chinese kilo bars. It would make a great conversation piece and an even better paperweight! 

infometron's picture

You da (number) one, SilverRunNW!

Canadians love being secund! ;^)

Drat! Tyberious! Oh, well, no shame in being TURD!!! :^)

SilverRunNW's picture

Kilo Gold

Tyberious, yes, a chinese "good delivery bar" (?) would be a nice addition to the collection.  I do though, really like the kilo dragon since my birth year is a dragon year in the Chinese calendar.

squib's picture

I'm still alive

I am trying to remove myself from "the system" as much as possible. My richness will come from more time with my family. Be simple. Repudiate the rat race. My compost pile is almost ready, garden begins in a month and a half. Starve the Beast.

0) Sanity.
1) Family and friends.
2) Food and water.
3) Tents and sleeping bags, backpacks, camping and survival gear,
4) Tools (no, not the bipedal kind as used in the modern rendition of the word).
5) Books.
6) Musical instruments.
7) Bicycles and skateboards.
8) Stuff of vice and indulgement (tobacco, pot, liquor, etc.)
9) PMs.

infometron's picture

SGE Standard 1kg bar

tyberious's picture

Dragon

Tis a nice coin. I collect the silver zodiac coins.

Turd Ferguson's picture

Nope

MODERATOR

That is a 100g bar.

I already contacted Koos. He doesn't have a 1kg bar image, either.

Turd Ferguson's picture

JeffC and BlytheM lovechild terrorizes Manhattan

MODERATOR

infometron's picture

Whoops! Just noticed that too!

Whoops! Just noticed that too!

Edit: Curious that those SGE 1kg bar images are so hard to find... purposeful (to mitigate counterfeiting)?

AGAU's picture

Gld inventory

So guys how does the official inventory compare to the "shares" outstanding ?

if there is a large short position in gld how would they get the gold to cover the physical withdrawals requirements of the AP 's they would surely have their tit a wringer huh? And if that comes to be, there will be plent of willing folks to swing on the wringer handle ha

wildstylechef's picture

Tell The Fed How You Really Feel About Banks Trading Physical C

Tell The Fed How You Really Feel About Banks Trading Physical Commodities

Tyler Durden's picture

 

Delighted by the Goldman Sachs et al commodity cartel holding on to aluminum inventory in one of their warehouses and pushing prices artificially higher? Happy that JPM is reprising the role of Enron (without admitting or denying it) and creating "schemes" with which to boost prices for end consumers (and have FERC furiously slap its wrist in response)? Ecstatic by that whole "precious metals" manipulation 'thing' by assorted unnamed banks (aside from the London fix of course - that has now been confirmed)? Then take this opportunity to tell the Fed how happy you really feel.

Click on the link below for the full comment form.

Fed%20commodity%20question_0.jpg

Motley Fool's picture

fwiw

I do not expect GLD to keep losing weight all the way to zero. At some point the fund is likely to be simply close out. Perhaps somewhere between 600-700 tonnes.

Dagney Taggart's picture

Forget GLD

The USU et al. train is about to leave as the Iran deal takes effect this weekend.

Nuclear power WILL prevail, people.

heart

tyberious's picture

  ALLEN WEST: OBAMA

ALLEN WEST: OBAMA ‘ABJECTLY DESPISES’ WHITES

wnd.com / By BOB UNRUH / January 14, 2014

War hero and former Republican congressman Allen West is asking how long it will take for “you people” – white Americans – to realize that their president “abjectly despises” them.

In a commentary posted Tuesday on his website, West, who represented Florida in Congress after an extended career in the U.S. military, confronted the issue of racism.

Citing Obama Attorney General Eric Holder’s warning that schools must drop policies that “disproportionately punish minorities,” West asserted it’s not racist to punish blacks more when they are causing more trouble.

“I taught high school for one year in Deerfield Beach, Fla., and in the end, it was such an enjoyable experience breaking up fights daily, that I decided to return to the combat zone of Afghanistan,” West wrote. “Teachers are already disrespected and attacked, not feared. There were students at Deerfield Beach who steered clear of the lunchroom for fear of being picked on or engaged in a fight.”

West said the violence on campus “was perpetrated eight out of 10 times by black students, male and female, but it had nothing to do with racial disparity.”

READ MORE

tyberious's picture

China: Gold price decline

China: Gold price decline premeditated. U.S. has started a currency war

china_gold-300x250

thechinamoneyreport.com / D.Collins / January 15, 2014 

China National Gold Group Corporation, General Manager Sun Zhaoxue has come out and told the world media that the U.S. is suppressing the gold price. The reason for America’s manipulation of gold is to ensure U.S. Dollar dominance on the world stage. America has by default ended up with the world’s reserve currency and therefore , get the world to work for them in exchange for an ever increasing supply of printed greenbacks. He also went on with an excellent analysis on of America’s war against Europe and the Euro using their investment banks. Another good insight from Sun Zhaoxue is that while major players like Warren Buffet and Goldman Sachs talk about how they hate gold and forecast price declines they have made large bets on gold and golD companies.

His comments from the Liujiazui economic forum were as follows:

“The hottest topic at the moment is oil and gold. The ground war we are seeing around the world is I think war for oil whereas gold
is the currency war. Why? We observe that the integrity was the driver for US Dollar to become world reserve currency. The US Dollar and gold decoupling from 1971 caused the US Dollar to depreciate massively. From 1990 onwards, the Eurozone was in consultation to form a strong Euro to counter the US Dollar, in order to prevent the latter from stripping Europe of its wealth. The Euro was born in 1999, supported by its strong economy and 11,000 tons of gold.

READ MORE

ag1969's picture

If it wasn't for...

If it wasn't for TPTB whom are looting GLD and every other gold hoard they can get their hands on, you would have been doing your comparison to the World Trade Center rather than the Empire State Building.  I'm just sayin'...

tyberious's picture

Jim Rickards: The Fed is

Jim Rickards: The Fed is tapering QE into a recession

from Boom Bust:

Jim Rickards, lawyer, economist, investment banker, is a self-proclaimed gold-vigilante with over three decades of experience working in capital markets. In an interview with Boom Bust, Jim gives us his views on where the economy and monetary system are headed. He sees trouble for the current post-Bretton Woods monetary system.

For the first time in history, more than half of all members of Congress are millionaires. Of the 534-current members of Congress, at least 268-had an average net worth of $1 million or more. While the US is faced with unprecedented issues surrounding unemployment, food stamps, social assistance and minimum wage rates, it begs the question: has the US turned into a plutocracy?

tyberious's picture

OUT OF CONTROL

OUT OF CONTROL GOVERNMENT

from The Burning Platform:

Do you get any benefit from our government? They’re getting ready to spend another $1.1 trillion, you know, to keep things going for awhile longer. There’s a lot of free shit that needs to be given out, and a lot of military hardware and union government drone pensions that need to be paid (for people that retired at 50). But not for Obamacare, since they opted out of Obamacare. But you will be paying for their major medical insurance.

Remember all the turmoil when the government “shut down”? No? Because there wasn’t any turmoil, other than tyranny and punishment ordered by Obama, who hates America and Americans. People will blindly stare at their phones, their T.V., and their computers while the government pisses away all their money, and borrows another trillion to fill in the gaps. Our government is so far out of control and divorced from reality that it cannot be saved, in it’s present form.

Read More @ TheBurningPlatform.com

tyberious's picture

Open Letter to Prime Minister

Open Letter to Prime Minister Cameron — Re: LBMA Gold Trading

by David Jensen, Safe Haven:

ATA_lbma_good_delivery_refiner_300X295.j Dear Prime Minister Cameron,

I am writing about gold trading at the London Bullion Market Association (LBMA) in London which is the preeminent Western gold trading exchange.

The LBMA trades 290 million oz. of gold per day or, by another measure, trades 350% of annual global gold mine production each day.

LBMA gold trading is largely based upon highly leveraged gold instruments that are only notionally backed by gold but, in reality, these gold instruments can be created without limit thereby flooding the trading market with fictitious gold

Read More @ SafeHaven.com

tyberious's picture

Big Banks Launder Hundreds of

Big Banks Launder Hundreds of Billions of Illegal Drug Cartel Money … But Refuse to Provide Services for Legal Marijuana

from Washingtons Blog:

HSBC-drugs-and-terrorism-financing.jpg?fStunning Hypocrisy

The big banks have laundered hundreds of billions of dollars for drug cartels. See this, this, this, this, this and this (indeed, drug dealers kept the banking system afloat during the depths of the 2008 financial crisis).

The HSBC employee who blew the whistle on the banks’ money laundering for terrorists and drug cartels says said: “America is losing the drug war because our banks are [still] financing the cartels“, and “Banks financing drug cartels … affects every single American“.

And see this.)

And yet the banks refuse to provide banking services for LEGAL marijuana in states like Colorado which have blessed the sale of pot.

Read More @ WashingtonsBlog.com

ancientmoney's picture

GLD owners skittish, while SLV owners are strong hands . . .

While GLD shareholders dumped their shares in the gold takedown the last 18 months, freeing up gold for the TBTF banks to seize and ship to parts unknown (well, mostly known), look at SLV.

It is said that silver investors are fickle, and at the first sign of a downturn, turn tail and run, selling their silver holdings as fast as possible.

Well, looks like there's a first time for everything, huh?

Silver prices tanked about 25% harder than did gold's price, yet those "fickle" SLV owners hung in there, taking every punch the market (TBTF banks) could throw at them.

Cats mate with dogs, up is down, global warming is global climate change, silver investors are more solid than gold investors.  Yup, all makes perfect sense.

PaPaSpeed's picture

Is there any Gold?

This quote appears every day at Harvey’s site:
“The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.”

So, if we believe Harvey, there is no gold in the GLD. They can say they had 1350 metric tons to start 2013 and finished with 798, it was only paper gold. There was never any physical gold, if they need to add gold inventory, they simply add “paper gold” to their ledger. Do they really buy physical gold in the open market? It’s a scam.
Is there any audits of physical gold at the GLD, Ft. Knox, West Pt, or anywhere.? Not that I know of. So what may appear to be a lot of gold leaving, it did not go anywhere, there never was.
The only time the price of gold is going to move up is when the fed and the bankers want it to. For now they don’t. I hope I live long enough to see it skyrocket.

tyberious's picture

Hyperinflation 2014-The End

Hyperinflation 2014-The End Game Begins

 

Jay Radio Header

Jay Taylor Media - Listen and Download   

Dr. Mark Thornton, an Austrian economist with the Mises Institute, visits for the first time and John Williams and Daniel McAdams return visit to the radio show.

 

John Williams has issued his latest annual warning of hyperinflation. He thinks that starting this year, the money-printing virus inflicted on us by policy makers will manifest itself through an inflation problem much worse than that of the 1970s.

 

From his Austrian economic perspective, how does Dr. Thornton think the massive printing press virus will be resolved? With our money being debt based since 1971, could deflation thinkers like Robert Prechter be right in predicting a sub 1000 Dow, consumer price deflation and a "strong" dollar?

 

Daniel McAdams will join us to talk about the latest war mongering Neocon efforts to parasitically enrich themselves through the ravages of war financed, of course, by money printing. Time permitting, your host will share his views on the markets and discuss how his newsletter model portfolio is performing thus far in 2014.

Turd Ferguson's picture

Pining's latest post

MODERATOR

Actually got a reply from BarryR. Click this link: http://www.tfmetalsreport.com/comment/377056#comment-377056

ancientmoney's picture

@PaPaSpeed re: GLD have any gold?

"So, if we believe Harvey, there is no gold in the GLD. They can say they had 1350 metric tons to start 2013 and finished with 798, it was only paper gold. There was never any physical gold, if they need to add gold inventory, they simply add “paper gold” to their ledger. Do they really buy physical gold in the open market? It’s a scam."

---------------------------------------------------------------------------------

Actually, Harvey says there is no beneficial gold.  By that, I think he means there is no gold to be had by those who invest in GLD, and no silver to be had by those who invest in SLV.  Only APs can remove physical bullion form these entities, and only in very large  tranches.  Invetsors in SLV or GLD get an account that says they own xx shares in the ETF.  No gold, no silver--just shares.

That being said, there is no telling what the "inventories" of these ETFs actually are made of.  It could be actual bullion, and/or some combination of long COMEX contracts or other paper claims to bullion; COMEX allows GLD or SLV shares to be used to settle, so the opposite may also be allowed.  The TBTF banks make up the rules as they see fit for their own benefit, regulators be damned.
 

Turd Ferguson's picture

New from Brent in SanFran

MODERATOR
1ShotAK's picture

? 789.56 MT=How many contracts?

indecision ??

ancientmoney's picture

@!shotAK re: how many contracts?

I assume you mean how many COMEX contracts, at 100 oz. each does that GLD current inventory equal.

By my back-of-napkin calculation, it's 252,660 or so COMEX contracts.

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