The New Trend In Gold

470
Mon, Nov 5, 2012 - 9:25pm

Our bullion and coin affiliation, the Hard Assets Alliance, recently published this very interesting paper in conjunction with Casey Research.

The paper is printed below and I want you to read it very carefully. Study the charts, too. Then, what are your conclusions? Do you agree with the central tenet of the paper, namely that demand for paper metal is waning, or do the charts tell a different story?

I look forward to reading your comments.

TF

The New Trend in Gold

By The Hard Assets Alliance Team

It's not too often that you see a major shift within the gold market.

The last such recalibration in sentiment for gold investors was the introduction of the first gold-backed ETF in 2004, and the subsequent explosion in exchange-traded products (ETPs) for bullion and precious-metals equities.

Today, another tidal change is under way, as the flow of funds into structured bullion products ebbs. I think this shift – as you'll read about in a moment – signals two things. First, it confirms that growing numbers of investors are increasingly nervous about the reckless monetary and fiscal paths being pursued on a global scale. Identifying this trend early on will let investors position themselves accordingly.

Second, it tells me that acting now – securing the gold you want and need – is critical to withstanding the likely fallout ahead from the mountain of unpayable government debt and promised benefits. If we're correct about the dismal future of all major currencies – the dollar's inexorable decay in purchasing power and the "race to the bottom" between it and other currencies – then failing to act will greatly degrade your future standard of living.

What is this new trend? It's simple, yet powerful...

Investors are shifting from paper to physical

We began to watch this trend after it was reported last year that billionaire hedge fund manager John Paulson dumped his shares in the ETF GLD, opting instead to purchase physical metal. Since then, the shift out of paper proxies for gold and into the metal itself has picked up steam, and it's now clear that a new investor trend is under way.

Here's the evidence. The following chart shows the total purchases since 2001 of gold coins and bars versus the net additions to gold ETPs.

Total coin and bar purchases are up 96% since 2009, while net additions to ETPs are down 73% over the same period.

While ETPs include the ownership of physical bars, it's clear that increasing numbers of investors are buying more bullion than proxies. This is a remarkable shift, especially given the claimed popularity of GLD.

The shift is even more dramatic with silver.

Investors have tripled their silver bullion purchases since 2007, while the exchange-traded vehicles sold 26 million ounces more than what they bought to back their funds last year.

Why is this happening? And what does it mean?

Certainly some of the shift stems from concerns with the funds themselves. While we discount allegations that these funds don't possess the metal they claim to hold, there are other issues, such as complicated custodial structures and the possibility of leasing or substituting paper certificates for physical metal.

Another reason for the shift is certainly due to global economic, fiscal, and monetary concerns. As fears of systemic risk ratchet higher, it's only natural for investors to gravitate toward the safest methods for holding physical metal. Throw in events like what happened to MF Global last year, and it's easy to understand why many investors would prefer holding their own bullion over a fund.

More important, what should we do as a result of this trend?

First, this is not a "keeping up with the Joneses" debate. We support the overall thrust of this shift into physical metal; gold is not an obscure metal that sits in a vault and "does nothing." It offers direct and immediate financial protection for you and your family like nothing else can.

Remember that gold is above all else the world's best, time-tested form of money – something people were duped into doubting in the 20th century, but are now beginning to remember. Today's environment is exactly one in which gold shines: eroding purchasing power of paper currencies, vulnerable global economies, fears of inflation and/or deflation, a shaky banking system, insurmountable public debt levels, and fanciful money-printing schemes… if there were ever a time to own gold, this is it.

Having metal in your control and at your disposal empowers you in times of turmoil and lets you avoid dependence on counterparties.

Second, this trend carries a subtle signal: diversify. If risks are at a level sufficient to encourage holding physical metal, it's also worth diversifying that risk. Stash some at home, use private vaults, and store some internationally. Even large institutional investors frequently use more than one facility. No single method or location is risk-free, so spread it around.

An easy way to do that is with a new breakthrough program: Hard Assets Alliance. Storage locations include Zurich, London, Melbourne, New York, Salt Lake City and Singapore. You can conduct all services online, and the metal is fully allocated and registered in your name. Selling and taking delivery are as easy as buying or selling GLD. Perhaps most attractive is that your order is bid out to a network of dealers who compete for your business, ensuring you get the best available price. All of the details are available in our free Action Kit.

Remember: once Main Street enters the precious metals market – whether it's an overnight event or a slow awakening over time – we expect supply for physical metal to become increasingly spotty, premiums to rise, and much higher gold and silver prices to ensue. That process may be under way now, so our advice is to make sure your stash of gold and silver is big enough to get to the other side of the crisis intact.

Bottom line: this is a trend you want to be a part of – and you don't want to be late.

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  470 Comments

  Refresh
Mickey
Nov 8, 2012 - 11:15am

Graham Summers on BOE decision today

November 8, 2012

Did the Bank of England Just Kill the QE Trade?

In case you missed it, something of major import occurred today.

That something is the Bank of England announcing that it is suspending its QE efforts because of questions relating to its "potency."

This is a heck of a statement from a Central Bank. And it's coming from the one that has even outdone Bernanke's QE efforts.

Since the crisis began, the BoE has announced QE efforts equal to $598 billion. The UK's GDP is $2.43 trillion. So the BoE has engaged in QE equal to over 20% of the UK's GDP. By way of comparison, the US Fed has announced QE equal to about 12% of the US's GDP (I'm not counting Twist here).

Despite this massive amount of QE, 2.53 million people are out of work today in the UK, up from 2 million at the start of the Great Crisis in 2007. Similarly, the UK's GDP remains well below its peak.

In simple terms, QE fails to generate economic growth or jobs. End of story. The BoE spent 20% of the UK's GDP on QE (a truly staggering amount) and more people are unemployed now than when it started. And GDP has yet to get even close to its pre-Crisis highs.

And yet, the US Federal Reserve continues to believe that QE is the answer to our economic prayers. At this point they're not only ignoring history, but they're ignoring real world examples (the UK), which show that QE fails to aid the economy or jobs in any meaningful way.

Meanwhile, the cost of living continues to spike around the world. Workers have demanded wage hikes everywhere from Chicago to Germany to China. Food prices continue to rise as does energy.

There is a word for this... it's called stagflation. And it never ends well. Which is why I strongly urge everyone to prepare for tings to get much much worse before they get better.

Now more than ever, investors need to get access to high quality guidance and insights. There sheer magnitude of the issues the global financial system is facing is enormous!

For that reason, we have lowered the price of an annual subscription of my Private Wealth Advisory newsletter to just $249 (down from $300).

Private Wealth Advisory is my bi-weekly investment advisory service tailor made for individual investors who want to stay informed of the real story in the global economy and outperform markets.

To whit, my clients made money in 2008. And we've been playing the Euro Crisis to perfection, with our portfolio returning 34% between July 31 2011 and July 31 2012.

And this incredible newsletter is now on sale at $249 for the next 12 hours (until tonight at midnight).

So if you've been holding off on subscribing to Private Wealth Advisory for whatever reason, this is your one chance to subscribe now, and lock in a price of $249 for the lifetime of your subscription.

To take advantage of this Special Offer... and start receiving my hard hitting, global market investment commentary delivered to your inbox every other Wednesday...

Click Here Now!!!

Best Regards,

Graham Summers

Bugzy
Nov 8, 2012 - 10:54am

@ Mickey

Thanks for getting back.

ALL - please reference statements.

This from Zero hedge............... etc.

Coming out with statements without pointing to where you got the info from is poor form.

B

The Green Manalishi
Nov 8, 2012 - 10:44am

Ned Naylor-Leyland on the Keiser Report

Keiser Report: Triple-Dip Recession Nightmare (E364)
Mickey
Nov 8, 2012 - 10:42am

bugzy

look at ZH posting today--BOE is dealing with a qe ceiling by not extending

Zoltan
Nov 8, 2012 - 10:38am

@Bugsy

5) The shadow on the bricks does not appear to coincide with the people in front of it. Look at the shadow on the floor. Picture is lit from a very high angle.

6) How much pressure would be on the floor? How practical is this stacking (no pallets, binding wire) for inventory management?

It does look contrived. Even a politically correct (ie one black guy) group of "monitors" in suits and ties.

@Turd please get us back on track with some gold and silver postings.

Z

PS I tineyed the image. It only appears on the Spiegel site (no other hits). This is unusual for a stock photo (they are usually used elsewhere). Wonder if it was generated specifically for this story?

tmosley
Nov 8, 2012 - 10:34am

lol, was that supposed to

lol, was that supposed to actually be gold? I didn't even think it was. Who would store gold like that? The floor would buckle, even if it was sitting on bedrock. But it is sitting on what looks like either concrete or linoleum tile.

61 courses of at least 25 bricks @400 oz each is 610000 toz. That makes the facing stack about 21 tons. The small stack at the front is another 360,000 toz, at least.

No, these should be sitting on palates, not in a gigantic vertical stack. Also, the style of the suits and the black guy's hairdo make me think this is a really old picture besides.

Visit the FAQ page to learn how to track your last read comment, add images, embed videos, tweets, and animated gifs, and more.

Bugzy
Nov 8, 2012 - 10:08am

Posting on old thread as Turd, understandably drew a line under

I was going to take a 'breather' for a while. Probably for the same reason that Turd closed out the Wednesdays thread. However this picture has been bothering me and I wanted to share my thoughts.

Several things are wrong in this picture.

1) There are 70 courses of bricks high. There appears to be no tie in to the side walls. This is incredibly unstable. If there is even the slightest outward gradient then the whole lot would just fall forward. Try taking house bricks and then stacking them (with no mortar) in this manner (70 courses) against a building without them falling. Would you stand under it?

2) The step at the bottom: 6 courses deep. Now these bricks are obviously placed by hand. 400 oz each. Yet the back ones are at arms reach! This is not the way one would build or dismantle a wall of 400 oz bricks. Imagine the leverage and strain resulting from having to place 400 oz brick at arms length? Again and again and again. No, one would not build/dismantle in such a way.

3) The cut away area to the top left. There is no apparent reason for this. Why would one leave this bit empty? Answer - because if it was just a complete wall then some may think it nothing more than fascia. By leaving this empty, it gives the illusion of depth. As with the step mentioned in #2 - more depth.

4) The folk writing on clipboards. One is obviously led to believe that they are checking something and look official. Yet what could they really be writing - yep - saw a lot of Gold bricks. They obviously cannot count the Gold or check serial #.

No - I strongly suspect that this picture is completely contrived. To give the impression of a massive amount of Gold. Why would one need to contrive such a picture and make it look as if it is massive and well audited?

Answer: There is not much real Gold there. STACK!

Bugzy.

Probably going to take some time out. There appears to be a disruptive influence right now (clique even). Incompetent or malicious. I do not know.

Please cherish this meeting place. It is a gift to all of us and not a nursery to trash.

Edit - Are you a troll Micky? I just read your comments above - what story are you referring to? BOE halts QE.

Turd - you need to get back behind your wheel.

Bugzy out.

The Green Manalishi
Nov 8, 2012 - 10:01am

Goldmoney Jim Willie Interview part 2

Jim Willie (Part 2/2): the rush for physical gold is on
Jim Willie (Part 1/2): US recovery is a fairy tale

Subscribe or login to read all comments.

Contribute

Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 5/18

5/18 2:00 ET Goon Bostic speech
5/19 8:30 ET Housing starts
5/19 10:00 ET CGP and Mnuchin US Senate
5/20 10:00 ET Goon Bullard speech
5/20 2:00 ET April FOMC minutes
5/21 8:30 ET Philly Fed
5/21 9:45 ET Markit flash PMIs for May
5/21 10:00 ET Goon Williams speech
5/21 1:00 ET Goon Chlamydia speech
5/21 2:30 ET Chief Goon Powell speech

Key Economic Events Week of 5/11

5/11 12:00 ET Goon Bostic speech
5/11 12:30 ET Goon Evans speech
5/12 8:30 ET CPI
5/12 9:00 ET Goon Kashnkari speech
5/12 10:00 ET Goon Quarles speech
5/12 10:00 ET Goon Harker speech
5/12 5:00 ET Goon Mester speech
5/13 8:30 ET PPI
5/13 9:00 ET Chief Goon Powell speech
5/14 8:30 ET Initial jobless claims and import prices
5/14 1:00 ET Another Goon Kashnkari speech
5/14 6:00 ET Goon Kaplan speech
5/15 8:30 ET Retail Sales and Empire State index
5/15 9:15 ET Cap Ute and Ind Prod
5/15 10:00 ET Business Inventories

Key Economic Events Week of 5/4

5/4 10:00 ET Factory Orders
5/5 8:30 ET US Trade Deficit
5/5 9:45 ET Markit Service PMI
5/5 10:00 ET ISM Sevrice PMI
5/6 8:15 ET ADP jobs report
5/7 8:30 ET Productivity
5/8 8:30 ET BLSBS
5/8 10:00 ET Wholesale Inventories

Key Economic Events Week of 4/27

4/28 8:30 ET Advance trade in goods
4/28 9:00 ET Case-Shiller home prices
4/29 8:30 ET Q1 GDP first guess
4/29 2:00 ET FOMC Fedlines
4/29 2:30 ET CGP presser
4/30 8:30 ET Pers Inc and Cons Spend
4/30 9:45 ET Chicago PMI
5/1 9:45 ET Markit Manu PMI
5/1 10:00 ET ISM Manu PMI

Key Economic Events Week of 4/20

4/20 8:30 ET Chicago Fed
4/21 10:00 ET Existing home sales
4/23 8:30 ET Weekly jobless claims
4/23 9:45 ET Markit flash PMIs
4/24 8:30 ET Durable Goods

Key Economic Events Week of 4/6

4/8 2:00 ET March FOMC minutes
4/9 8:30 ET Producer Price Index
4/10 8:30 ET Consumer Price Index

Key Economic Events Week of 3/30

3/31 9:45 ET Chicago PMI
4/1 8:15 ET ADP Employment
4/1 9:45 ET Markit manu PMI
4/1 10:00 ET ISM manu PMI
4/2 10:00 ET Factory Orders
4/3 8:30 ET BLSBS
4/3 9:45 ET Market service PMI
4/3 10:00 ET ISM service PMI

Key Economic Events Week of 3/23

3/24 9:45 ET Markit flash PMIs
3/25 8:30 ET Durable Goods
3/26 8:30 ET Weekly jobless claims
3/27 8:30 ET Personal Inc and Spending

Key Economic Events Week of 3/9

(as if these actually matter)
3/11 8:30 ET CPI
3/12 8:30 ET weekly jobless claims
3/12 8:30 ET PPI
3/13 8:30 ET Import Price Index

Key Economic Events Week of 3/2

3/2 9:45 ET Markit Manu PMI
3/2 10:00 ET ISM Manu PMI
3/2 10:00 ET Construction Spending
3/4 8:15 ET ADP employment
3/4 9:45 ET Markit Service PMI
3/4 10:00 ET ISM Services PMI
3/5 8:30 ET Productivity & Unit Labor Costs
3/5 10:00 ET Factory Orders
3/6 8:30 ET BLSBS
3/6 10:00 ET Wholesale Inventories

Recent Comments

by lakedweller2, 26 min 53 sec ago
by boomer sooner, 30 min 45 sec ago
by OceanX, 31 min 2 sec ago
by lakedweller2, 46 min 16 sec ago
randomness