Massive Inflows Into GLD

I was already planning to write a public article today about the massive additions to GLD "inventory" in 2016. But now, with news hitting about Blackrock's gold ETF, writing this post has clearly become a priority.

So, before we get started, be sure to review this: http://www.zerohedge.com/news/2016-03-04/blackrock-suspends-gold-etf-issuance-due-demand-gold

Here's the full press release from Blackrock: http://www.businesswire.com/news/home/20160304005402/en/Issuance-IAU-Gold-Trust-Shares-Temporarily-Suspended

As ZH states: "It appears the huge demand for physical gold (and lack of supply) is finally catching up with the manipulation of paper prices. If this is anything other than a brief technical suspension, it could well unleash panic buying and as we already pointed out - there is no physical gold!"

I guess we'll just have to see what happens next. However, as we've maintained for years, all it will take is ONE delivery failure and the entire Bullion Bank confidence scheme will come crashing down. While this news today is not technically a delivery failure, all of this surging demand for gold certainly seems to be pushing The Banks to the brink.

To that end...the topic of today's post...

We've long maintained that the GLD is nothing but a bank-sponsored vehicle for syphoning away investment demand from actual, physical gold. Allegedly, the GLD saw massive inflows of "gold" up until 2012 and then it saw its "inventory" cut in half between 2013 and 2015. We've wondered from where the GLD and its custodian, HSBC, would source new gold WHEN investment demand for gold finally returned. It now appears that we are in the early stages of getting our answers.

To that end, please consider the incredible alleged inflows of "gold" into the GLD in 2016.

As noted above, the GLD stated that it held 1,349.92 metric tonnes (mts) of "gold" in its "inventory" on January 1, 2013. As price was smashed lower over the next three years, the GLD "inventory" moved lower, too, reaching a low of just 630.17 mts on December 17, 2015. Now let's stop right there for a moment and consider the significance of the date, December 17, 2015. What happened on that date? Why does that sound so familiar?

Oh, yah. I remember now. December 17, 2015 was the day following the announcement from Mother Fellen that her Federal Reserve was raising the Fed Funds rate for the first time in nearly 10 years. What did the chart look like on that day? See below for one from the archives:

So, what happened the day after that, Friday, December 18? Not much. Gold rallied back a little and closed $16 higher at $1066. N0t much to get excited about. Price was barely off the lows of $1050 seen the day before and every purported "analyst" was projecting triple digit gold prices for 2016.

But not us at TFMR. In fact, we'd already been calling for a January rally and something else happened on December 18 that really got our attention. For the first time in nearly two months, there was an addition to the GLD "inventory" that day. And we weren't talking just a few ounces. That day, December 18, saw a GLD addition of 18.74 metric tonnes, growing the alleged "inventory" by nearly 3%. Here are c&ps of two comments we added to that evening's podcast thread:

WOWOWOWOWOWOW!

Submitted by Turd Ferguson on December 18, 2015 - 4:57pm.
15
That has to be just about the largest one day addition of "gold" ever seen!

Maybe an AP paying back a big short?

More significantly, maybe another sign of the possible bottom discussed in this podcast???

And

I'm looking back over my notes from the past few years

Submitted by Turd Ferguson on December 18, 2015 - 5:04pm.

Today's HUGE dump of gold INTO the GLD is a very good sign of an impending rally. Back in January, the GLD added 9.56 mts on Jan 15, 13.74 mts on Jan 16 and 11.35 mts on Jan 20.

Other significant additions occurred in April and September. Nothing even close to 18.74 mts in a single day. And how about the timing? Big final washout yesterday following the rate hike. Price recovers 1.5% today and GLD "inventory" grows by 3%. Hmmmm.....Will be chewing on that over the weekend.

So, now, he we are on March 4, 2016 and price is $1275 as I type. That's up $225 or 21.4% from the lows December 17. And what has happened to the GLD "inventory"?

  • It added 4.76 metric tonnes just yesterday
  • This brings the total addition for just this week to 30.93 mts
  • For all of 2016, the GLD "inventory" has now grown by over 150 mts
  • And since the low of December 17, total "inventory" has now grown by 163.16 metric tonnes

(Leaving aside that it will take Germany over seven years to repatriate 300 metric tonnes and the GLD has allegedly dug up more than half that amount in less than ten weeks...)

And now let's look at an updated chart with the addition of just one, simple notation:

At a time when global demand continues unabated, with China, Russia, India and others all importing gold on a monthly basis, the GLD has managed to add 163.16 metric tonnes to its "inventory". How much gold is that? About 5,246,000 troy ounces. How much is that? Well, there are 400 troy ounces in every London Good Delivery bar so we're talking about more than 13,000 of these:

And if you stack 192 of those bars onto a pallet, you'd fill over 68 of them:

That's A LOT of gold...again, all at the same time as Russia and China both import about 20 mts per month: https://smaulgld.com/russia-increases-gold-reserves-by-ounces-in-january-2016/ and India imports up to 100 mts per month: http://www.business-standard.com/article/markets/gold-import-bill-up-12-reaches-35-bn-in-2015-116011600181_1.html

Where the heck do you suppose all of this gold is coming from???

Look, if you can't see that the Bullion Banking Confidence Scheme is seemingly hanging by a thread, then I'm not sure there's much I can do to help you. Additionally, if you continue to own ETFs as a proxy for the real thing, the day is coming when you're going to find yourself supremely frustrated and angry. When the music stops, you're going to be left standing without a chair to sit on.

All signs point to 2016 indeed being the "year of consequence" that we forecast. Perhaps The Banks can keep their scheme going a bit longer, perhaps not. Just yesterday, they added nearly 26,000 contracts of open interest (paper obligations of 2.6MM ounces or an additional 81 metric tonnes) to the Comex in a seemingly desperate attempt to contain price and, by extension, suppress sentiment and physical demand. Will it work? Will they soon be able to play their old tricks of reversing and smashing price, thereby "calming the storm"? Or, instead, will price continue to rocket forward with increasing speed as The Banks get squeezed for once? We're likely not going to have to wait too long to find out.

For today, let's just leave it here:

Continue to prepare accordingly by stacking physical metal, not paper certificates.

TF

92 Comments

Turd Ferguson's picture

This week's discussion with Eric Sprott

MODERATOR

We recorded this about two hours ago. Good stuff: https://www.sprottmoney.com/blog/march-4-2016.html

arch stanton's picture

wow

first idiot.  sold my miners two weeks ago with sinclair wispering in my ear "this may be the rally you don't sell"

ag4me's picture

2nd idiot

Endeavor Silver up 16% today!

Nick Elway's picture

turd idiot

Thanks for the insight.

Quote:
We've wondered from where the GLD and its custodian, HSBC, would source new gold WHEN investment demand for gold finally returned. It now appears that we are in the early stages of getting our answers.
canary's picture

Investing in gold&silver was crazy from day one

And will continue.....

shallow_explorer's picture

Zero Hedge Mole Hill

Looks like another mountain made out of a mole hill by ZH.  Technically, the demand isn't for Au, but rather it is for ETF shares, as the first sentence of the Black Rock IAU PR reveals:

"iShares Delaware Trust Sponsor LLC, in its capacity as the sponsor of iShares Gold Trust (IAU), has temporarily suspended the creation of new shares of IAU until additional shares are registered with the Securities and Exchange Commission (SEC)."

Later in the PR:

"Under the ’33 Act, subscriptions for new shares in excess of those registered requires additional filings with the SEC.

"This surge in demand has led to the temporary exhaustion of IAU shares currently registered under the ’33 Act. We are registering new shares to accommodate future creations in the primary market by filing a Form 8-K to announce the resumption of the offering of new shares."

So what do we know?  IAU is getting popular.  It has reached its registered share limit.  It can't issue more shares until it registers them with the SEC.  But this has nothing to do with demand and/or access to physical bullion.  The story for Au and Ag is bullish, we don't need to lose credibility by making it out to be more than it is.

PR: http://www.businesswire.com/news/home/20160304005402/en/Issuance-IAU-Gold-Trust-Shares-Temporarily-Suspended

JQuest's picture

The Battle is on!

The PPT has had it's hands full this morning, you can tell by the buy/sell action by the tick they are battling this PM surge with all they've got setting caps and then fall back when caps are broken then setting new caps, this is a real war!

JQ

Swift Boat Vet's picture

Smash?

I think not a large one, if any at all.  Of course profit taking but how much at this point?  Enough to turn prices drastically down?  Just decided,  gonna buy several tubes of either rounds or ASEs.

Swifty

brokerk22's picture

This

may be the rally you dont sell.  Turd hate to point this out but the COT may not be very useful IMO.  You have been calling for the market to go down for weeks and it has ripped higher.  This is by no means an attack on you.  You do excellent work and I am a happy subscriber.  But you have to call it out sometimes.

Turd Ferguson's picture

Fun with options

MODERATOR

As mentioned in Wednesday's podcast when copper broke out, I bought 500 shares of FCX.

For fun, I also bought five calls. As you can see below, I just sold them for a $400 profit and I've fully reinvested in a shot to make some more...shall we say...substantial fiat...as the chart still looks like $13 is a possibility.

Turd Ferguson's picture

Dude, I understand

MODERATOR

Did you read this post, though? This may very well be the beginning of a commercial short squeeze where they actually lose for once. We'll see...

Response to: This
LostMind's picture

Top 10

Celebrate good times ... Come on!

canary's picture

Happy Friday

    

JQuest's picture

Can't hold PM's by Capping?

Then just start pumping the Yen....

This market is soooooo fake.....

JQ

tread_w_care's picture

PHYS and PSLV

Sprott's physical backed funds - I own them, in a 401K vehicle.  At the time of doing deep research on them compared to ETFs, they seemed superior, but yet, they ARE paper and you need significant minimums to convert to physical - but that IS possible.

I'm hopeful that this move by Blackrock signals increased interest in these two funds, which haven't been much in favor recently. 

Still, at the end of the day - they're denominated in USD and physically stored in Canada by the Royal Mint (I believe).  Would love to have Sprott do some reassuring on these two sometime . . .

P.s. picked up a flat out gorgeous piece of American engineering today - POF P308.  We do still manufacture some real stuff here . . .

Turd Ferguson's picture

Gold is trying to hold in

MODERATOR

Gold is trying to hold in there against this crazy USDJPY but we'll see. It's already $12 off its highs...a lot like Feb 11.

IF IT CAN JUST HOLD ON...a weekly close above the Feb 11 intraday high of $1263.90 would be a very bullish development.

silverflower's picture

After 5 years getting kicked my ass around

...I just can imagine that the cartel banks will lose control of the Gold & Silver price....soon. Because why in the hell would they then have built up such a large Short position in silver? No, I expect another waterfall soon. But hell, what do I know? I am just a little ounces stacker somewhere in Merkel land.   

Orange's picture

Sprott

Sprott should invite, what's his name, the Italian American, from CNBS to visit Sprott's physical holdings in Ottawa showing bars and serial numbers. That would move a lot of interest from the gld.   

J.P. Cubish's picture

First majestic

Up nearly 100% off the lows of just 6 weeks ago.  Such leverage.

Thanks for the great site Turd.

http://www.tfmetalsreport.com/podcast/7377/visit-keith-neumeyer

TF Metals fan's picture

Turd: my compliments!!

For weeks you described the options that could play out today. The set-up looked like a mirror image of so  many BLBS Fridays in which we saw the rinse-and-repeat cycle being played out after a week of price-capping through the release of naked shorts. Yet, without raising hopes too much, you also made clear that this time could be different. And after four years of manipulation a certain care is fare. 

So thanks for the warnings but also the glimmer of hope. Let us see if next week around this time we are still at this level or higher. Then I might become really bullish!!

SteveW's picture

Both silver and gold

are falling back from their highs so things are coming under control (sarc).

No way would I buy physical today until I see what happens Sunday night/Monday morning. I am however in the camp that says it's different this time.

canary's picture

@SteweW....Agree.

The commercials must be tripling down on their short contracts.

Turd Ferguson's picture

Self-fulfilling TA?

MODERATOR

As Alasdair pointed out yesterday, traditional technical analysis teaches that the successful resolution of this pennant means that the rally is only halfway completed. Since we started at $1060 and moved to $1260 before beginning the "pennant" or "flag", this suggests something like $1450 as the next target.

OBVIOUSLY, The Bullion Bank Cartel will fight us tooth-and-nail on every UPtick. However, as more and more classically-trained technicians see this formation, there will be more and more Spec money flowing into all forms of gold. So, we'll see...

Turd Ferguson's picture

fwiw

MODERATOR

I'll very likely end up giving back $350 of the $400 that I made...but...when playing with house money, sometimes it's fun to let it ride.

smiley

Response to: Fun with options
Turd Ferguson's picture

reiterating

MODERATOR

Again, it would be a very positive technical signal IF gold can somehow close the week ABOVE the intraday high of Feb 11 at $1263.90. This will get the attention of the momo-chasers, too.

Last is $1271.20

Response to: Self-fulfilling TA?
Orange's picture

Turd

With Gold at $1450, where do you think silver would be? $18+

I was tempted to sell my uslv yesterday, but thought something is different this time.

Probably won't sell for a while. 

Edit: where is Dr J. Hopefully he sold his dust the other day.

Turd Ferguson's picture

And don't forget about copper rallying too

MODERATOR

The pressure will increase on JPM et al and they may have to pull back. Will be plenty of buy-stops to run IF price can extend through the October 28 highs of $16.38...and it should, IF gold and copper continue higher.

Since early February, we've discussed silver needing to "catch up". However, the extreme naked shorting of JPM and the other commercials has contained it. But the "relative price" vs gold appears to be $17+.

Response to: Turd
JQuest's picture

Whats with all the V Bottoms?

DJIA = Morning plunge then prompt V bottom to the upside then what looks like minimum support capping as not let the stocks fall.

NASDAQ = Same

S & P = Same

Crude = Same

The market indicators are acting very suspiciously, as the hidden hands are hard at work.

To me the sign of manipulation is the constant saw tooth action.

JQ

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