The GLD Two-Step

Much has been made recently about "metal flowing back into the GLD". As if this is a sign that "investors are returning to the sector" and "the ETFs are working just as you'd expect". Uhhhh....not so much. Let's look at the actual numbers.

First of all, you know the story. While price was beaten savagely lower in 2013, allowing JPM and the other banks to either dramatically reduce or eliminate altogether their net short positions, the GLD was raided for metal to cover the ever-increasing demand from China and other dollar creditor nations. From a 1/1/13 "inventory" of 1,349.92 metric tonnes, the GLD was consistently pillaged for supply and it finished the year at 798.22 mts, down over 40%. Even though price initially bottomed on 6/28/13 at $1180, the GLD shed a total of 171.28 metric tonnes between that date and the double bottom date of 12/31/13.

Apologists for the fractional reserve bullion banking system claimed that the "inventory" declines were due to investor liquidations, caused by lower prices for gold. Only a gold bug kook would believe that the GLD raid was being orchestrated in an effort to dislodge physical supply. "Just wait", the Apologists said. "The gold will return as prices rise", they promised. 

Since The Double Bottom was established on New Year's Eve, there have been all sorts of articles and commentaries proclaiming the return of gold to the GLD. A quick Google search yields all sorts of results. Here's just a sampling:

http://www.bloomberg.com/news/2014-02-14/gold-extends-climb-to-three-month-high-as-spdr-holdings-increase.html

http://www.proactiveinvestors.co.uk/columns/ft-money/15417/gold-etf-holdings-rise--15417.html

http://goldnews.bullionvault.com/buy-gold-0131020143

http://seekingalpha.com/article/2025061-will-the-gold-and-silver-surge-continue

After perusing these articles, you would think that gold was rapidly flowing back into the GLD as prices rally. Of course, if you did think that, you'd be wrong. Let's take a look at the actual numbers and see if we can spot a pattern.

Though there were a few, small additions to the GLD back in August, for most of 2013 there were nothing but daily withdrawals. The first, major addition that got everyone's attention was on 12/20/13, when 5.30 metric tonnes suddenly appeared in "inventory". The following market day, 12/23/13, that metal was just as suddenly removed as 8.40 metric tonnes left the building. Hmmmm, said Turd. That's curious. Since then, this happened two more times. There was a deposit on 1/17/14 that was completely removed by 1/23/14 and there were a series of deposits in late January and early February that, as of yesterday, have also been removed. It looks like this:

DATE             NET CHANGE            TOTAL "INVENTORY"            PRICE

12/19/13               -3.90 mts                             808.72 mts                           $1194  

12/20/13                +5.40                                      814.12                                 $1204

12/23/13                 -8.40                                     805.72                                 $1198

1/17/14                    +7.49                                     797.05                                 $1252

1/22/14                   -1.20                                      795.85                                  $1239

1/23/14                    -5.39                                     790.46                                 $1262

2/13/14                    +7.50                                    806.35                                 $1300

2/14/14                    -5.10                                     801.25                                  $1318

2/19/14                    -5.64                                      795.61                                 $1320

So what do we see here? Every major addition that has occurred over the past two months has been met with an almost immediate, subsequent withdrawal. It appears that every time an Authorised Participant comes up with some gold to cover and close a short sale, another Authorised Participant quickly grabs the metal in order to settle one of its own physical claims. Recall that we've been writing about this phenomenon for months, as gold rapidly flows from London to Switzerland, where 400 ounce bars are being recast into Asian kilobars with official government insignia. Just today, there's another headline detailing the Swiss export of gold: http://www.bloomberg.com/news/2014-02-20/switzerland-sent-80-of-bullion-exports-to-asia-in-january-1-.html

The tight supply of London Good Delivery (LGD) bars is also evidenced by the persistently negative Gold Forward rates. Negative GOFO used to be an anomoly, occurring for just 7 days over the period of 1989-2012. Lately, though, it has become the status quo as one-month GOFO rates have now been negative for 94 of the past 160 market days. That they remain negative currently is obviously one of the factors prohibiting Cartel Bank price raids into this 2014 rally:

DATE             1-mo         2-mo        3-mo     6-mo      12-mo
11-Feb-14    -0.03400 -0.02000 -0.00400 0.05800 0.12600
12-Feb-14    -0.04800 -0.02600 -0.01200 0.04400 0.12200
13-Feb-14    -0.04600 -0.03000 -0.01000 0.04400 0.12200
14-Feb-14    -0.05000 -0.03000 -0.01000 0.03600 0.11800
17-Feb-14    -0.05000 -0.03200 -0.01000 0.03400 0.11600
18-Feb-14    -0.05200 -0.03400 -0.01400 0.03800 0.11400
19-Feb-14    -0.04800 -0.03000 -0.01000 0.03400 0.11000
20-Feb-14    -0.05200 -0.03400 -0.01200 0.03200 0.11200
 
Getting back the GLD "inventory", one final note. Did you notice the net change YTD?
 
As you know, price hit a Double Bottom on 12/31/13 at $1180. Since then, it has rallied over $140 or nearly 12%. But the GLD is now down YTD, falling from 798.22 mts to yesterday's 795.61. "Investor liquidations" my arse! And without the 23 metric tonnes "paid back" to the GLD in covered shorts, GLD "inventory" would now be down 26 metric tonnes YTD!
 
And it's not just the GLD. As Jesse notes here, if you combine all of the popular funds and exchanges, "inventories" declined by over 61 metric tonnes in January...all while price was rallying from $1180 to $1260. http://jessescrossroadscafe.blogspot.com/2014/02/61-tonnes-of-gold-bullion-flow-out-of.html
 
So, don't buy this nonsense that "gold is returning to the GLD" and that "the ETFs are functioning just as they should". Physical gold is clearly in very short supply worldwide as demand is insatiable. Continue to stack, while there's still time. "Emere stupri intinge!"
 
TF
 
 

90 Comments

metalsbyamile's picture

Its a pleasure

to say it for the 3rd time in 5 days ....Furst!

Take that silver66 smiley(and a paid newbie to boot).

My timezone will allow domination.

wildstylechef's picture

2nd

ya Canada wins another gold in curling! lets go hockey!

nut cutter's picture

2nd weeee

weee

Gold Dog's picture

Who are you going to believe?

Bloomberg or your lying eyes?

Your friend,

Dog

Charles S. Hamlin's picture

US Mint delays

US Mint update:  I usually order a few limited edition silver items from the US Mint every year and it appears that this year they are having a hard time filling orders, see message below (it was originally supposed to ship in early January and then it was pushed to February and now March)...

Greetings from the United States Mint.
We regret to inform you that the item(s) listed below
are currently on backorder. Please expect your item(s)
to arrive within the timeframe listed below.
Track your order at http://catalog.usmint.gov
Thanks again for shopping with the United States Mint.

Order #: XXXXXXX
Sold To : XXXXXXX
Ship To : XXXXXXX
Item: LS2 Qty: 2 Exp Ship: 3/12/14
2013 LIMITED EDITION SILVER PROOF SET

-Chuck
 

Verus nemo's picture

Thurd?

Thanks, Turd! Great info...

Edit: Fourth or fifth, apparently. Whatever. This really *is* a ridiculous tradition!blush

metalsbyamile's picture

I dunno Turd

Great article that comes to a logical conclusion but the more i read the more the indicators seem wrong-at least 50% of the time.

I recall all the screaming and yelling that the Comex will fail, default if you will.

On the other hand Jim Sinclair said this was absolutely false, why should or would they default. He stated it's a rigged game and never will it default.

The myriad of bloggers and posters that touted that has fallen by the wayside.

This is all great in theory but i sure wouldn't bet my stack on it....just saying.

SilverSurfers's picture

8th

For a Top Tenner!! what is being demonstrated here is that bullion piles are sought to suppress bullion prices, and it has worked for years. GAME OVER?

Next Post: On the floor. You dont ask for your stuff back, unless you want it back.

What they asked for, what was agreed to, and what has been delivered pursuant thereto, are different things. We already know US breached by not keeping the gold safe (by bar number) and hence a BREACH, and since this has occurred while the US/Germany have been "allies", IT IS FREAKIN FRAUD on a pal, compounded by not keeping a delivery schedule, another BREACH, but the pal has no choice now, (someone got to merkle) to accept what the counter party want to send, now merely as face saving gesture, rather than honorable business with and protection of a close pal.

DX up 80.4, Yield up 2.76, Bullion flat, 22 is presenting a little problem here, but the action is STEPPING up, (21.50 step) seen in the graceful retreat to 22.50 (the next step).

metalsbyamile's picture

I'm a 100% bull

But another question that may have been covered.

Someone here posted a link to Jeff Christian (whom i've always considered a first class ahole)where he stated in the interview that the bull bloggers were out right lying about the fact Germany wanted  its gold back in 7 years.JC said that he had a copy of the german bank document stating otherwise , this being pure distortion by the bull bloggers ect.

Does anyone have a copy of the original doc they can post here? I'd like to swear at JC-but only if i have proof he is fos.

Just questions whirling in my mind as i contemplate a breach of old highs.

Addendum-I also watched JC debate Bill Murphy of Gata , I'm a member of LeMetropole so a big fan and supporter.But in that debate i actually thought JC made Bill look weak and fumble his stats as JC rebuked his every word.

ivars's picture

The fact that GLD is stable

The fact that GLD is stable means at current price - which has been increasing - physical demand and supply meets; It also means that cartel has stopped its aggressive selling to support USD= something may have gone amiss in agreements with USG or politically curbed demand - Turkey and India - has helped and this rise in price so far is acceptable for USG and bankers. So far.

Right now it seems focus of concerted efforts of USG and/or bankers has shifted to creating global instability as way to prop up USD. Seems it has worked this week as USDx moved above 80 and gold price has stabilized with no changes in GLD. USS Taylor is still in the Black Sea, I doubt it will move out by Feb 25th as it should.

silverwood's picture

BNN commentary

Tom Kendall from Credit Suisse still bearish on bullion ." Gold to go to $1000 level by years end." Talks about etf liquidation aspect.

http://watch.bnn.ca/#clip1070144

DeaconBenjamin's picture

Switzerland Sent 80% of Bullion Exports to Asia in January

Switzerland sent more than 80 percent of its gold and silver bullion and coin exports to Asia last month, the Swiss Federal Customs Administration said today in an e-mailed report. It imported most from the U.K.

Hong Kong was the top destination at 44 percent on a value basis, with India at 14 percent, the Bern-based customs agency said in its first breakdown of the gold trade data since 1980. Singapore accounted for 8.6 percent of exports, the United Arab Emirates 7.9 percent and China 6.3 percent.

Switzerland imported 4.32 billion Swiss francs ($4.87 billion) of the metals from the U.K., or 60 percent of total inbound shipments, according to the report. The U.S. was second at 4.9 percent, Italy at 3.8 percent, Germany at 2.8 percent and Thailand at 2.5 percent, the data show.

http://www.bloomberg.com/news/2014-02-20/switzerland-sent-80-of-bullion-exports-to-asia-in-january-1-.html

dgstage's picture

Unraveling

The United States of Decline: America is unraveling at a stunning speed and to a staggering degree. This decline is breathtaking”

 

- See more at: http://pamelageller.com/2014/02/united-states-decline-america-unravels-increasingly-dizzying-pace.html/#sth

Soros and Faber Are Betting On a Market Collapse And You Should Too

http://sgtreport.com/2014/02/soros-and-faber-are-betting-on-a-market-collapse-and-you-should-too/

silver66's picture

Thanks for this weeks A2A Turd

Just finished listening. As Brent described his awakening in 2007, I thought he was describing my awakening. His ideas for allocation to gold in a portfolio made good sense.

I liked his statement that "you can argue about religion and you can argue about politics but you can't argue with math"

Great interview

Silver66

SilverSurfers's picture

dgstage

thank you kindly for your many informative posts/links. yes

Fiat Money printed on demand by a fiat government, makes complete sense.

Grandich, I believe, also has shorted the equity markets. 10yrYield ticting 2.7 to 2.78. Increasing taper (taper to zero) + Increasing Rate (to short term 4%) = Collapse.

Dr Jerome's picture

Countdown

The GLD inventory my be the best "countdown to "something big" that we have. 40% in one year suggests that the big event is coming in the 2nd quarter of 2015.

But might the gold purchasing countries simply switch to other commodities when gold can no longer be sourced? Abated Chinese demand could let the system continue. Nobody wants a Pyrrhic victory. I don't see the Chinese hastening a collapse of the world. They want a smooth transition to power, keeping the rest of the world somewhat intact and dependent on their exports.

They have far more treasuries to unload than there is gold to be bought. And if the SDR system that JC Collins and Jim Willie are describing (whether or not it will work is worthy of further discussion),  when that system is activated, its not just gold that will back it but other commodities as well. This current SDR proposal (25% gold - 25%% commodity backing) is still 50% fiat. 

I am no longer convinced a total collapse is in our future. I see more of a steady decline into poverty for the 1st and 2nd world nations. TPTB want to keep some sort of fiat system going. They'll only back it with gold to the minimum extent they have to, retaining as much fiat flexibility as they can muster. And 50% fiat gives these banksters lots of room to manipulate interest rates and M1 or M2 supplies.

I am digging in for the long siege. Hopefully, we do have enough time to become self-sufficient with food production and get our home and land paid off and free of banker control.

I am also hoping for enough of a "moonshot" without a collapse to liquidate most of my metal (yes, even pay the tax --I know you are reading this, you NSA goon) and pay off land and houses.

59LesPaul's picture

Re; UK Gold Exports

"In a note earlier this week, Australian bank Macquarie, citing trade data from EU statistics agency Eurostat, said the UK exported 1,739 tonnes of gold in 2013, with the vast majority sent to Switzerland."

Holy crap. No wonder the GOFO rate is negative.

http://www.reuters.com/article/2014/02/20/gold-switzerland-flows-idUSL6N0LP1JL20140220

Terp's picture

ETF vs Miners

Heya Turdmeisters,

I recently inherited a stock account. I finally moved it into my Ameritrade account and have control of it.

It has ETFs (GDX, GLD, PSLV, SLV)

I'll most likely keep the PSLV but- in your opinions and not trading advice - what would you say if I were thinking of getting out of the ETFs and buying some miners instead? (I'm more of a commodities guy and have had little success with stocks)

I've already sold off a lot of the financial and company stocks and bought up some miners this morning. Man that felt good.

Thanks in advance!

I also inherited an IRA. I'm in the process of moving that over to Hard Assets Alliance, but haven't heard from them in two weeks. I'll give them another week, otherwise can anyone recommend a good PM IRA I can roll into?

.

benque's picture

"steady decline into poverty"

Doc,

I tend to agree with you on that one.  It is evident in it's progress so far, to any who care to look.

Here, as just one example, gas is now "okay" at double what it was just 8 years ago.  Each new reset of prices higher is blamed on evil speculators, or evil terrists, or evil axises, or evil this, or evil that.  Then, when the self-styled "statesmen" direct their massive and benevolent intellects at the problem, then self-congratulate themselves for solving it, everyone is used to the new and now "okay" prices, and they do not go back down (unless it's Gold or Silver...LOL).

Much more of the same to come, and I keep trying to guess who the next token "evils" will be.  Just hoping it's not us!!

SteveW's picture

metalsbyamile: German gold repatriation.

Don't get sucked in by JC's selective parsing of any agreements, he used to be a reporter and has excellent language skills.

As far as I know:

1. There is no evidence that Germany requested repatriation in 7 years.

2. There is no evidence that the NY Fed requested repatriation in 7 years.

You can use either #1 or #2 when making arguments. Now JC may have a German bank document that may or may not be public, but I doubt that he has access to the documents and/or discussions that occurred before and are the basis for this document.

This entire comment of his was in any case pure deflection. I know Frances asked one important question that he completed deflected. He certainly is a master of the interview.

bullion only's picture

"steady decline into poverty"

Doc, 

Same here, slow road to poverty or the road to serfdom.

Keep the populace just barely fed and warm and give them hope,remember green shoots, and keep them under control.

Slowly decimate the middle class. Saddle them with huge debt, that itself as a form of prison.

Entertain them with modern day circus acts like reality tv. Put our kids into debtors prison with student loans getting degrees for jobs that no longer exist.

Develop an entitlement society but give them enough to live and enough hope to keep them from protesting and just enough fear to keep them voting for you so those checks keep coming.

Ukraine, Venezuela,.......Detroit? No not Detroit or any other US city. No riots. Sheep don't riot.

I told my 16 year old kid, "You will go to college locally meaning in state and it will be public.

There is no way in hell any under grad college education anywhere is worth 250K. Parents are convinced and guilted into believing they must provide the best for their kids even if they have to take on huge debt.

The middle class now is taking care of elderly parents as well as kids returning home after college with no job prospects.

My next door neighbors kid just returned from Australia with a masters degree and student loans. She is working as a waitress. And she bought a new SUV. Nicer car than what I drive.

Things are bad and will only get worse.

Slow motion train wreck. It would be fun to watch if we wern't on the train.

Rant over

RT

PS Sinclair says no comex default, they will cash settle which is the same as default.

mac's picture

collapse will arrive

but phys Au may be "risk off" this time. I figure to short S&P soon...twitchy...not today, not yet....

treefrog's picture

terp

your inherited IRA ? are ira's at risk of being nationalized?  how much penalty would there be to close it out and move that value into something less at risk?  stacking?  equities?  other?

i don't have any answers, just questions to suggest you look at.  frown

Terp's picture

treefrog

Thanks for responding, tree.

I thought of that too, but haven't looked into it. I was hoping HAA might not get nationalized right away and I would have time to get out of it... and in the meantime enjoy my IRA in Gold and Silver.

Right now it's in a Wells Fargo Brokerage IRA and I want out asap. I haven't looked into the penalty and taxes to get out, but if it's only about 10% then it would be worth it - I would make that back in physical and/or stocks in no time when this bull gets some legs =)

JY896's picture

Visual aid for GOFO [eom]

question's picture

@Dr Jerome re Countdown

Good post doc

"I see more of a steady decline into poverty for the 1st and 2nd world nations."

My view also; as the worlds access to cheap and easy energy declines so will the industrial nations wealth and power decline. Some will do better longer, think Russia and maybe China, but the US is leading the way into the future IMHO.

"I am digging in for the long siege. Hopefully, we do have enough time to become self-sufficient with food production........."

Long siege; Yes, empires usually take a long time to dissolve and  they don't go easy into that long dark night. Everyone should be growing whatever they can, wherever they are. In containers if that's all that is available, in the ground if you are so fortunate; plant fruit and nut trees and berry bushes for ourselves and those who come after us. Store seeds and grow sprouts.

"....land paid off and free of banker control."

Worth a try I guess but the state will be very hungry as it starts to eat it's own as it slowly starvesbroken heart

@benque: "I keep trying to guess who the next token "evils" will be.  Just hoping it's not us!!"

It sure as hell won't be the financial wizards who have generated this cesspool of smelly darkness; we're trying to dispel some of that darkness; makes us stand out. A lighthouse can warn of danger and be a target at the same time but, hey, no one said it was going to be easy.wink

Keg's picture

@Dr J

Great comment.  Think you are correct.  The majority are not sheep, they are the frog in the slowly warming frying pan.  So there will be acceptance of the decline.  Oh, people will bitch but they will not do anything to change it.  Only when people are starving will they take action.

Verus nemo's picture

Thanks for that GOFO chart, JY896

That is my preferred avenue to scrutinize the data; more info in about the same space as a table. May I ask what the URL source is for this chart (so I can bookmark it and not again have to ask for help)? 'Surely something's got to give way soon. Like everyone else, I guess, I'm guessing that it'll be the price...upwards! :)

chrtoo's picture

Gold Bug Kook!

I resemble that remark.

Actually, this sounds like a new phrase for a T-Shirt at the TFMR Store. I can see that emblazoned across my chest. Probably want to do it in a Tie-Die pattern or something else, equally psychedelic.

CHR.

boomer sooner's picture

Stopped for lunch, thanks TF

Stopped for lunch, thanks TF for the read.
Could 795 tonnes be 0?
Seems awfully fishy if they have to wait for a deposit to remove more tonnage. Makes you wonder how many different lists could the same bar numbers be on.

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