Unencumbered GoLD

Thu, Apr 11, 2013 - 10:26am

After yesterday's nearly 17 metric ton withdrawal, it is becoming increasingly clear that a global movement is afoot to hoard massive amounts physical gold. Today, let's try to put all of this into perspective.

As you know, we've been actively chronicling the "investor liquidations" of the GLD. Of course, that's the popular SPIN. Supposedly, investors worldwide are reallocating assets out of precious metals and into equities.

On 1/2/13, the GLD allegedly held in "inventory" 1,349.92 metric tonnes of gold. By the end of January, that figure had fallen to 1328.09. By 2/28/13, the reported "inventory" was less than 1,270 metric tonnes and by late March it had fallen to 1,222 metric tonnes. And now, in April, we're rolling. Down over 35 metric tonnes month-to-date.

Yesterday alone, the GLD reported a total withdrawal of 16.84 metric tonnes of gold. This brings the total "gold" in "inventory" down to 1,183.53 metric tonnes. Year-to-date, the GLD "inventory" has been depleted by 12.33%. Stated another way, for every eight bars there used to be in "inventory", there are now seven.

Now, let's try to put this into perspective. Yesterday's withdrawal of 16.84 metric tonnes is 541,418 troy ounces. A London Good Delivery Bar is 400 troy ounces, so yesterday's withdrawal represented roughly 1,353 bars. The image below is of a pallet holding 192 gold bars.

The total withdrawal of 1,353 bars would look like this:

As Ruprecht would say: "That's a lot." But we're just getting started! As stated above, GLD has shed about 35 metric tonnes just this month. That's seven more pallets!

Now we're getting somewhere. According to the World Gold Council, 35 metric tonnes (those 14 pallets of gold) is about how much is owned by the Ukraine or Malaysia. And the GLD spits out that much in just eight business days due to "investor liquidation".

But let's not stop there. The cumulative withdrawal YTD is 166.39 metric tonnes. That's 5,349,562 troy ounces! On the pallets above, I've only shown you about 35 metric tonnes. For the total GLD withdrawals YTD, we have to add another 56 pallets or 10,686 bars or 4,274,362 ounces!

And again, we are told that this is all due to "investor liquidations". Let's stop there for a moment. Call me crazy but wouldn't you think that an "investor" who is "reducing his/her investment allocation in precious metals" would also be dumping silver? I mean, silver's a precious metal, too, isn't it? Hmmm.

Well, let's look at GLD's little brother, the SLV. On 1/2/13, the SLV reported an "inventory" of 10,084.96 metric tonnes of silver. As of last night, the SLV showed an "inventory" of 10,497.59 metric tonnes of silver, UP 412.63 metric tonnes YTD or almost 4%. WHAT?? Wait a second. That can't be right. My math must be wrong. GLD has shed 166 metric tonnes of gold YTD...more than the entire holdings of Thailand or Singapore...but, over the same time period, the "inventory" of the SLV has grown?? YEP!

Now, you're probably thinking: "I remember something earlier this year about a massive, one-day addition to the SLV". Yes, you do recall that. Here's a link: https://www.zerohedge.com/news/2013-01-17/slv-etf-adds-record-572-tons-silver-one-day-more-all-2012 Of course, 10,000,000 ounces or about 311 metric tonnes of silver were almost immediately withdrawn and shipped off to JPM's new vault: https://silverdoctors.com/18-3-m-oz-slv-deposit-jpms-new-silver-vault-jpm-discovers-way-to-bypass-comex-re-entry-process/ And we also saw a huge, 5,800,000 ounce (180 metric ton) withdrawal back on Friday. Even taking all of these shenanigans into account, the SLV "inventory" is still up YTD. So, again, I ask the question: If investors are liquidating the GLD due to asset reallocation, why aren't they liquidating the SLV, too?

Could it be that maybe, just maybe, the drop in GLD "inventory" isn't related to "investor liquidations" after all? Maybe, just maybe, were are instead seeing a conversion of paper shares into physical metal for delivery? Of course maybe, just maybe, even these withdrawals are just book-entry, unallocated "credits". Read this from page 18 of the GLD prospectus:

"Prior to initiating any creation or redemption order, an Authorized Participant must have entered into an agreement with the Custodian to establish an Authorized Participant Unallocated Account in London, or a Participant Unallocated Bullion Account Agreement. Authorized Participant Unallocated Accounts may only be used for transactions with the Trust. An unallocated account is an account with a bullion dealer, which may also be a bank, to which a fine weight amount of gold is credited. Transfers to or from an unallocated account are made by crediting or debiting the number of ounces of gold being deposited or withdrawn. The account holder is entitled to direct the bullion dealer to deliver an amount of physical gold equal to the amount of gold standing to the credit of the account holder. Gold held in an unallocated account is not segregated from the Custodian’s assets. The account holder therefore has no ownership interest in any specific bars of gold that the bullion dealer holds or owns. The account holder is an unsecured creditor of the bullion dealer, and credits to an unallocated account are at risk of the bullion dealer’s insolvency, in which event it may not be possible for a liquidator to identify any gold held in an unallocated account as belonging to the account holder rather than to the bullion dealer."

If you ever want to read the entire thing, here's a link: https://www.spdrgoldshares.com/media/GLD/file/SPDRGoldTrustProspectus2012.pdf

Anyway, let's return to this "disappearing gold" idea. Did you see this story earlier this week? https://bullmarketthinking.com/comex-gold-inventories-collapse-by-largest-amount-on-record/ Year-to-date, the amount gold held on deposit for Comex delivery has declined by nearly 2,000,000 ounces. This sounds about right as The Comex delivered over 1,000 contracts in January, about 14,000 contracts stood for delivery in February and another 1,400 or so in the non-delivery month of March. So, how about some more pallets? Two million ounces is 5,000 bars. Once again, our pallets hold 192 bars so we need another 26 of them to represent the total Comex withdrawals for the first quarter alone.

And let's not forget the gold that is flowing out of London and Shanghai each day. Our man on the ground in London is Andrew Maguire. He's been trading and acquiring gold for over 30 years so, through his network of contacts, he's able to accurately estimate/measure the daily amounts of physical gold being allocated and delivered. Of course, the daily movements vary based upon price, discount to futures and day of the week. However, I asked Andy for an "average". What does he see play out on an "average day"? The numbers he provided are: 10-12 metric tonnes per day in London and 12-15 metric tonnes per day in Shanghai. Uh-oh. That's another 26 pallets and that's only for "an average day". And we're not even including Dubai or any of the other global centers!

You know, I could probably keep going and continue to copy-and-paste that stack all day long. (I bought the picture through Dreamstime so I can print it as many times as I'd like.) I think you get the point of this exercise, though. MASSIVE AMOUNTS OF PHYSICAL GOLD ARE MOVING AROUND THE PLANET, MORE SO THAN EVER BEFORE, AND CURRENT GLOBAL STOCKPILES ARE BEING DRAINED.

You're being told that the GLD is shedding gold and returning it to the Authorized Participants because "investors are re-allocating their portfolios away from precious metals". I'm sure some folks are so that's at least partially-true. But how do you explain away the fact that the SLV "inventory" is not down YTD? And where do you suppose all of that Comex gold went? And who/what is buying and taking delivery of, "on average", 20-25 metric tonnes per day through the world's physical delivery centers? And do you now think that gold at $1570 is expensive or inexpensive? Do you believe the "analysts" and "experts" who claim that gold is headed to $1300? Or $1100?? Or $800??? Are you going to side with The Sheep and The Paper Bugs and convert your metal back into fiat currency? Or are you going to side with whomever is accumulating all of this gold on a daily basis?

Additionally, do you trust yourself, your brain and your instincts? Do you wonder where all of is this gold is going? Are you curious as to why this is happening? Everyone from the financial media down to your friends and neighbors may not care. But you should. You most definitely should! And you should buy this dip. You should have bought the last dip. And you should buy the next dip. And every dip. And take delivery. While you still can and while there's still time.


About the Author

tfmetalsreport [at] gmail [dot] com ()


Apr 13, 2013 - 10:50am

Have a great weekend

yeah, right, 1099 coupled, so she can just love it, the wall paper, made of pasted kitco charts. At least DAN is simling, ALL BEFUDDLED, in his COUNTER-INTUITIVE WORLD, when bro, BILL, sounding like RANTIN BOB, as never before.

meh ..... but have a great weekend,

on the back page, for something just a little different.


Apr 13, 2013 - 8:14am

Protoreptilians at the FED

Sitting before a monitor, with all kinds of bells and whistles, head phones on, hearing all systems go, yet then could not legally buy a beer, as rear elevon actuators were apparently online, in a moment of past glory, saying "check" loud and clear for all to hear, as concurrently, proto-reptilian B2-1a comes flying in, escorted by hot dogs of course, into apple valley, in a desert, with hot chicks, made complete sense, and life easy, but not so today, with inverted B2s, AHs with Raw Raw to boot, trying to newk into oblivion, as a gate keeper, paying homage as best able at the river styx, he now is relying on massive mope, with apparent autistic goldmen prognosticating altruistically lower pricing against the puppets to go short, with puppeteer pompous trumpeted overtones, foolishly believed as least by some, or most, and not just lightening up in troubled times, the 10% advisory rule thrown to wind, in desperation of course, with Gross-ly abundant insider information, and consequential 500 tons of paper gold, yet apparently glad the smart ones are still sucking up the physical, still existing or somehow otherwise, in an apparent shortage of supply, so keep stacking, which means that the smart ones are countering the FED's latest play, which apparently now is the final abandonment of long held rules or thumb, don’t fight the FED, of course, forcing majors to sell forward to juice the fruit pie at discounts, which of course answers the teeth grinding question, to some extent, where is it going, as if and of course giving nemesis access to forwards and tonnage, to continue the game remarkably forcing the expected COT flip, and hence the call of 2-3 days, yet forward supplies and down tonnage says otherwise, dazed and confused, projecting the long awaiting COT flip, and the now expected disorderly rise, recaptured, finally.

Common sensical pento beans must be passing gas again, alleged foolishly relying on old habits and traditional training, yet also smells the dark horse coming on fast, in current disbelief, with critical eyes toward absent backup of early insider wide-spread goldman autistic-altruistic calls, apparently having gone to law school, as well. Common sense says with the 10% advisory rule, fighting the fed, COT flip, lcs indicators, dazed and confused, that QE Zirp and Kaplop seems to have screwed things up, those totalitarian powers shifting eon sands apparently yet again, in an endless struggle, heralded by all, so keep on stacking. So, 10% advisories, fighting the FED prohibitions, forwarding bull sells, projected disorderly rises, foolish beliefs, makes absolute common sense for purportedly expected COT fipping, and physical actual shortages, being just dazed and confused, as the necessary precursor to those shifting sands in that endless struggle.

Sincerely Yours, AH

Apr 13, 2013 - 6:03am

Orderly FED

So being 1/2 way through KWNs Mcgunire's say so, it occurred that the price would disorderly snap back, curiously, he broke the bullion mego phone rule, by calling the snap back, within 2-3 days, but the real world word that caught attention, was the use of word "disorderly". it been presumed that an underlying purpose of the FED was to prevent any disorderly ascent in the gold price so as not to scare the peeps, rendering the feel good and be happy crowd with a much comfort level, so as to continue, with the FRN QE program, until such expected growth materialize. This is a new angle. Mcquire, breaking the mold, and breaking expectations, the big MO, characterizes the predicted violent snap back as "disorderly". Pondering is order, despite AH references.

Stage 1, lift off, where stored bullion of the national treasure is used as ammo to short selling, a presummd word for rehypothecation, alla B Murphy, alla, ITS ALL GONE, per GATA, or most of it has been leased, loaned, swaped, sold into the market, despite the early stages of 1/n exponential raise from 2000 to 2008. Lehan Bro apparently stated that this approach is no longer successful, to keep the ascent orderly.

Stage 2, high speed velocity, where commercial hoards are used, and the debate rages, allocated, which can not longer be found, versus allocated court gestures, beliving in the system, but they game MF Global, which discretited holding accounts in commercial entities, put an end to unallocated pretend, to keep the ascent orderly.

Stage 3, Escape velocity, where there is no physical, and Celenti cries out, fool me once, and mass exits appears in the commercial space, but still just enough physical is still around, to keep the ascent orderly.

Stage 4, orbiters, where no physical remains, its empty space, extraterrestrial now in affect, for the reshuffling, as the market is now all paper, so the expert story goes, to smash the price down, which destroyed the leveraging to physical, the eastern boys out looking for the real stuff, as the market spot price comes cascading down, characterized as an act of desperation, to keep the ascent orderly.

so, now, on with the show, 1/2 done, where, apparently, Einstein believes for every action there is an opposite reaction, as the orbiter pilots only by thruster, the main engines having long ago, exhausted the solid rocket boosters, to keep the ascent orderly.

So, at this stage, old notions of an orderly ascent, are suspect, as gravity now grips, on auto pilot, where thrusters are to be exclusively used, and THE HELL WITH ORDERLY ASCENT. So, the question remains, how do, if required really, does the FED prevent a disorderly ascent, if even the thruster are without the real suff, its ALL GONE, and thus, one might think, that planetary gravity, sling shots, and solar flairs and MOPE are the only energy supplies left ..... 2nd half should be fun, OUT HERE IN OUTER SPACE, as old orderly beliefs get trashed in these days of "deperation".

Stay tuned for the AH job, just blowin wind, of course of course, the infamous Mr Ed, without the objectional ballyhoo side-swippin sensitive otobiotransducers, with raw raw to boot .

Apr 12, 2013 - 11:14pm

Is not this a

place for stackers, 2000 to 2022, a generation, is the time horizon, as it really is for the boys, who trust me, care not a flying fig for traders, bumb outed just now, while the stackers jump for joy for the low prices, getting good stored value for the fiat.

Hey papa, keep stacking!

Apr 12, 2013 - 8:26pm

Following the bouncing the ball

Many claim they have no crystal ball, though with cocsuredness spew prognositcations, though you often wonder, but on face value, accepted as is, something about admissions against interests, and so the question is often asked, who is on the other side of that moving opaque sphere, which is inherently risen, when not having a crystal ball, when the bouncing ball is necessarily opaque, otherwise, game over, and so, nearly all must follow the bouncing ball, and ask again, who is on the other side, in view of those prognositcations, and that teeth grinding and longing, to keep their eyes pinned to its highs and lows and points between, wondering out loud, who is on the other side of the trade, grinding away, but others may just be outside the permitted viewing box, accepting means, accepted styles, and speculate as to changing frequencies and compression rates, for any possible clues, of that often repeated longed-for phantom question, when repeatedly grinding, who is on the other side, when spherical frequency and compression might lead to clues unkown, just being helpful, apparently, the best way perceived possible, given the limitations, especially when dribbing one step behind, and out of view on the back page.

Sincerely yours, AH

(Murphy beat you all to it, AH "is one strange cat".)

Motley Fool
Apr 12, 2013 - 4:43pm


I suppose one could do that, but in the case of even wager one would need to shift the odds to about 50% ( in the mind of the other I suppose)...so that would make a bet at idk 65 GSR?

Apr 12, 2013 - 1:01pm

Troll spotting

Speaking of ass hats...

Note the time stamp. While I was furiously typing up a new post that printed at 9:52 am.

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

alan2102Mr. Fix
Apr 12, 2013 - 12:30pm

Mr Fix: how long?

Mr Fix: "How long do you think this can last?"

No later than 4 PM EST today, latest. Then kerblooey.

Stack'em High
Apr 12, 2013 - 12:26pm

ass hat tips

"You've misunderstood.....no one can give you an ass-hat"

i shall submit it to the TFMR hall of fame, it's quite possible I pissed myself! Thanks DPH! You may not "make" this forum, but you make the contributions that make it better!

Dont waste anymore time on him, he obviously does not speak the truth. Supposedly he has over $50k in PM's, but yet, thinks today is the day to say "I told you so". Maybe he just forgot to tell himself, or maybe he just a troll.

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