The New Trend In Gold

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.


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

turd [at] tfmetalsreport [dot] com ()


Nov 6, 2012 - 8:41am

OMG... First!

First to proclaim silver broke $31.25 resistance and is on the way up, up, up today!!! Next stop is $31.50. See you all there, hopefully today!

Nov 6, 2012 - 8:43am

Nice. This article explains

Nice. This article explains the trend away from paper gold, then promotes a company which sells paper gold.

Nov 6, 2012 - 8:47am


good morning, Turd.

Nov 6, 2012 - 8:47am

Net net: Paper will trend

Net net: Paper will trend toward zero, phys will break away from paper price or become unavailable.

BTFDWYSCYFI (Buy the fucking dip while you still can you fucking idiot).

This is likely to be the single greatest trade in the history of humanity. With just a few thousand dollars you can buy a significant fraction of a percent of the worlds silver reserves. You will still own that same percentage after the paper market collapses and all of the world's purchasing power moves back to physical things, especially gold and silver. You silver will be further buoyed by its soon to be widely recognized scarcity, if not a market signal failure/industrial panic.

The next set of oligarchs will be those who had the foresight to accumulate physical silver, and traded that silver for gold or wealth producing assets at the appropriate time.

Nov 6, 2012 - 8:50am

Ah ha...

(...still looking for a) THURD!!! ...or fifth or something...!

Nov 6, 2012 - 8:52am


my prayers are with you and your family today Turd.

get out and vote

more importantly stack and prepare!

Mr. Fix
Nov 6, 2012 - 8:55am

Thanks for the early thread.

Best wishes to you and yours.

Nov 6, 2012 - 9:01am

Teacher Turd

I like how you are being a teacher framing the question turd. You have mentioned before how you are trying to gradually guide us to see things by ourselves. It is a noble cause.

You're doing it in a nicer way than Santa who is also trying to teach. His heart is in the right place but he just gets frustrated with his students sometimes. You don't and your patience is appreciated.

Best wishes to your wife in her recovery and thank you for still thinking of us as you play mr mom!

Nov 6, 2012 - 9:10am

I generally agree...

...with the article, but am not a fan of off-site storage. MFG proved off-site storage doesn't protect your PMs from looters who wear suits and speak proper English!

In the case of SHTF, how is someone from Smallville, AnyState going to get to get physical possession of those PMs stored in a vault in NY or offshore? I guess I should caveat my remarks by stating that I don't expect to own vast quantities of PMs, so my thoughts are somewhat parochial.

I do like the idea of bidding out purchase to a network of dealers and that may be the real usefulness of the service. Purchase through the service and then take immediate physical delivery before SHTF!

Nov 6, 2012 - 9:20am

Still a small market

The silver demand figure of 120 million ounces quoted in the article TF posted above, listing silver bars and coins, represent small-scale investment demand only... and this is, at present, represents barely over 10% of total worldwide yearly silver production. So before we get all hot and bothered by the obvious rise in investment demand for physical vs. ETP's (and this is interesting, don't get me wrong) we need to be cautious and remember that even WITH all of this increased demand, that 120 million ounces of silver is still only about 1/10th of world-wide yearly production. This tells me we have a long way to go. Just my opinion. Below figures from the 2012 Worldwide Silver Report:

Supply 2011 2012

Mine Production 751.4 761.6

Net Government Sales 44.2 11.5

Old Silver Scrap 228.7 256.7

Producer Hedging 50.4 10.7

Total Supply (in Million Oz) 1,074 1,040.6


Nov 6, 2012 - 9:22am

Contest ends Friday!

Are the guesses located anywhere? I think i guessed 31.60 and 1690, if I did it's looking like I have a chance for a hat. On a side note silvergoldbull has a contest for 1/2 0z of gold to first place guessing the spot at end of year for account holders.

Nov 6, 2012 - 9:31am


>>In the case of SHTF, how is someone from Smallville, AnyState going to get to get physical possession of those PMs stored in a vault in NY or offshore?

If TSHTF you will be glad your gold is not with you. Offshore would be even better as it would be away form the clutches of the greedy US government.

Nov 6, 2012 - 9:35am

I voted today...

2 Gold Sovereigns 20 Mexican Libertads Figured I wouldn't go with anything domestic today as an additional "protest" vote.

Gramp Horst
Nov 6, 2012 - 9:36am

Oh, That comment was from Horst...

I believe there is at least one MAJOR difference between ETFs and HAA... the fact that your metal is allocated and documented on a 1 to 1 basis. Paper Metal yes, fully allocated holdings yes, which may be shipped to you. 

what does it matter to you Horst? Do you even have any plan to hold shares of GLD, SLV or HAA? Doubt it.

Nov 6, 2012 - 9:38am

I'm excited for the new trend too!

A HeH trend! A trend that starts a parabolic move to the upside. And most of all I'm excited to not have listen about the election, especially from people who really have no clue.

Nov 6, 2012 - 9:38am
Nov 6, 2012 - 9:42am

It's obvious that the trend away from paper......

And into to physical gold and silver is because real gold and silver are shiny. 

For me it is not about timing or TA or Options or anything else that I am not smart enough to understand. Here is what I understand:

- Fiat money is dying because that is what fiat money does, it dies, every time

- I am paid the fruits of my labor in that fiat money which is dying

- I have a responsibility to my wife and children to make sure that the fruits of my labor continue to provide shelter, security, and abundance.

- The only way to stop fiat inflation in its tracks is to spend the fiat as quickly as I can. As soon as I exchange paper for something real, I have stopped inflation on that note.

- Money, real money, is something that maintains value over time, so that the energy I am storing today is still there in the future for my families shelter, security, and abundance.

- Ergo, it only makes sense to me that when I receive counterfeit paper in exchange for the fruits of my labor, I need to halt inflationary theft, by exchanging the counterfeit notes for real money as quickly as I can and then storing the real money at the bottom of the ocean.

- I really do not care whether silver is 26 or 45 when I make this exchange as I always consider it a miracle of God that I can still exchange dead man walking fiat paper for real money that is very shiny. I will continue to do exactly that until I can't anymore.

- Once I am no longer able to execute this exchange, I will no longer exchange the fruits of my labor for counterfeit fiat paper; why would I?

- I have unwavering conviction that I am right about this. 

Go vote for the truth today. If that means writing in Ron Paul, so be it. Today is not about which candidate will steal less of your God given freedom in the next four years. Right is right and wrong is wrong. Whatever decision you make in that booth today, make sure you have conviction that it is the right thing to do. Rock on Turdites, these are exciting and historic times!

Nov 6, 2012 - 9:43am

There will be no joy today

because They said there will be none.

Nov 6, 2012 - 9:50am

My two cents on paper gold and silver

Maybe paper gold and silver will go to zero... eventually... but it won't be any time soon. The herd will pile up into paper products first. Do you really think every one on the street will start buying physical when mania phase starts? So let's say by 2015-16 gold goes to $3,000 and silver to $300. Everyone and their mama will be investing in stuff like GLD and SLV. Only then - when it would be noone else to buy more - the paper crap will go kaboom. By that time paper gold can be switched to stocks or whatever else will be suitable at that time.

Nov 6, 2012 - 9:58am

How it works for me...

Upon converting FRNs to Phys, one gets the 'satisfaction' of buying, shopping, and spending. The best part is you have spent the FRNs, but not on some consumer crap, pissing away your wealth. Even though you have spent the fiat, you are now the owner of another asset, one which has the ability to preserve accumulated wealth during periods of currency debasement and inflation. 

I check my bank account and I am fiat poor. This keeps me from buying extra crap i just do not need. If I look at my account and there is a bunch of FRNs in there, I say, "ah I can buy that..." But in keeping those balances low and continued stacking had boosted my savings greatly, until I stashed it all in the forest, not being able to find it now!

Nov 6, 2012 - 10:04am

Removed comment

Removed comment.

Nov 6, 2012 - 10:10am

Nothing Quite Like A Rock

Okay, so ETF purchases are going down and physical purchases are up... it's about time already. But what about ETF liquidations and not just a decline in paper purchases? Are liquidations increasing to meet the physical demand? And if so, when will the precious metals ETF's be nothing but paper?

And what about the DTCC flooded out and lost certificates? Does that have anything to do with removing unbacked shares from the ETF's?

There's nothing quite like a rock for a solid foundation on which to build your house.

Nov 6, 2012 - 10:21am

I can not imagine having my

I can not imagine having my gold and silver stored by someone else. That to me defeats the whole purpose of PMs. I stack because I dont trust people with my savings whatever unit its measured in. 

Nov 6, 2012 - 10:23am


How about them Yankeeeeeeeeeeeeeeeeeeeeeeeeeeeeees...

rjsand beardeus
Nov 6, 2012 - 10:24am

Need help

The best place to go is almost always your local coin shop. Why pay for shipping when you don't have to?

The man who stole a leopard
Nov 6, 2012 - 10:26am
Nov 6, 2012 - 10:34am


So, ASE 28,000,000 votes for the people this year at the US Mint.

MR and BHO will get more votes.

2016 the people win ....

Nov 6, 2012 - 10:37am

@ Dobocop

Hat Contest guesses are here:

You can order them by column ;)

notmessenger tmosley
Nov 6, 2012 - 10:41am

@tmosley - When is the appropriate time

I know it cannot be predicted, but I am curious of your - and other's - thoughts on what some of the signals might be that the appropriate time to trade out of silver has arrived. Also know these can change between now and then, etc.

Nov 6, 2012 - 10:44am


how does goldmoney compare with etfs like GLD ans SLV? I have a portion of my stash held with them but sometimes wonder if i should swap it out for more phys

Become a gold member and subscribe to Turd's Vault


Donate  Shop

Get Your Subscriber Benefits

Exclusive discount for silver purchases, and a private iTunes feed for TF Metals Report podcasts!

Key Economic Events Week of 1/21

1/22 10:00 ET Existing Home Sales
1/24 9:45 ET Markit Manu and Svc PMI
1/24 10:00 ET Leading Econ Indicators
1/25 8:30 ET Durable Goods
1/25 10:00 ET New Home Sales

Key Economic Events Week of 1/14

1/15 8:30 am ET Producer Price Index
1/15 8:30 am ET Empire State Mfg. Index
1/16 8:30 am ET Retail Sales
1/16 8:30 am ET Import Price Index
1/17 8:30 am ET Housing Starts
1/17 8:30 am ET Philly Fed
1/18 9:15 am ET Capacity Utilization and Ind. Prod.

Key Economic Events Week of 1/7

1/7 10:00 ET ISM Services Index
1/7 10:00 ET Factory Orders
1/9 2:00 ET December FOMC minutes 
1/10 Speeches from CGP, Goons Bullard and Evans
1/11 8:30 ET CPI

Recent Comments

by Libero, 2 hours 4 min ago
by NW VIEW, Jan 23, 2019 - 11:55pm
by Turd Ferguson, Jan 23, 2019 - 11:10pm
by Green Lantern, Jan 23, 2019 - 10:38pm