Digging Deeper Into The Gold ETFs

Wed, Nov 6, 2013 - 9:59am

Much continues to be made about the historic "inventory" drawdowns of the GLD. It gets even more interesting when you compare the losses of the GLD to the "inventory" reductions of its two, biggest rivals.

As simple Google search of "largest gold ETFs" returns the following:

Symbol Name Price Change Assets * ▼ Avg Vol YTD
GLD SPDR Gold Trust $126.07 -0.58% $36,763,555 9,170,822 -22.13%
IAU iShares Gold Trust $12.68 -0.55% $7,205,410 4,276,858 -22.11%
SGOL ETFS Physical Swiss Gold Shares $128.64 -0.49% $1,214,987 44,729 -22.14%

With this as a starting point, let's dig a little deeper.

As you can see, all three mirror the value and return of physical gold and all three are down a comparable percentage, year-to-date.

Much has been made here and in other places of the massive draining pillaging plundering withdrawals seen so far in 2013 from the GLD so let's start there.

The GLD has a list of Authorised Partcipants:

"As of the date of this prospectus (4/16/12), Barclays Capital Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., Goldman Sachs Execution & Clearing, L.P., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc., Merrill Lynch Professional Clearing Corp., Morgan Stanley & Co. Incorporated, Newedge USA LLC, RBC Capital Markets Corporation, Scotia Capital (USA) Inc., UBS Securities LLC Virtu Financial Capital Markets, LLC (f/k/a EWT, LLC) and Virtu Financial BD LLC are the only Authorized Participants."

The APs are eligible to create and redeem shares through the sponsor (World Gold Trust Services) or the trustee (BNY Mellon). The metal is stored with the custodian which, in this case, is HSBC.

The GLD allegedly began the year with 1,349.92 metric tonnes of gold in "inventory". As of last night, it holds just 866.32 metric tonnes of gold in "inventory". This drop of 483.60 metric tonnes YTD is 35.82% of the 1/1/13 total. That's a lot.

As you can see above, the IAU is about 1/5 the size of the GLD. Regardless, it's still a pretty big fund. Though it's down nearly an identical percentage YTD in terms of return, the "inventory" plundering numbers are what got my attention.

First of all, some background on the IAU. Here are it's Authorised Participants:

"As of the date of this prospectus (3/14/13), ABN AMRO Clearing Chicago LLC, Barclays Capital Inc., Citigroup Global Markets, Inc., Credit Suisse Securities (USA), LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co., Goldman Sachs Execution & Clearing L.P., J.P. Morgan Securities LLC, Knight Clearing Services LLC, Merrill Lynch Professional Clearing Corp., Morgan Stanley & Co. LLC, Newedge Group USA, Scotia Capital (USA) Inc., UBS Securities LLC, Virtu Financial BD LLC and Virtu Financial Capital Markets LLC are the only Authorized Participants." 

Hmmm. Many of those look familiar, don't they? The sponsor of this ETF is a subsidiary of Blackrock and, once again, the trustee is BNY Mellon. For this gem, the custodian is the other principal member of The Evil Empire (https://www.tfmetalsreport.com/glossary), none other than JPMorgan.

Now to the inventory numbers. We're repeatedly told that the GLD "inventory" is down nearly 36% YTD on "investor liquidations and reallocations". OK. But IF that's the case, wouldn't you expect the IAU to be down 36% in "inventory", too? I couldn't blame you if you did but you would be wrong.

The IAU began 2013 with 217.71 metric tonnes of gold in "inventory". As of last evening, it shows 171.54 metric tonnes. If we do the math, that comes out to a drop of just 21.22%. Well, isn't that interesting. However, by itself, that doesn't tell a full story. Let's now take a look at the next largest gold ETF, the SGOL.

You may not be familiar with SGOL (https://www.etfsecurities.com/institutional/us/en-us/products/product/etfs-physical-swiss-gold-shares-sgol-arca). It, too, is an ETF which holds physical gold and, by prospectus, it's not allowed to lease it or loan it out. Even though it comes in at just 1/5 the size of the IAU and 1/25 the size of the GLD, it's still the 3rd-largest gold ETF on the planet. The fund has many of the same Authorised Participants as the GLD and the IAU and they're listed below:

"As of the date of this prospectus(4/13/11), Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., EWT, LLC, Goldman, Sachs & Co., Goldman Sachs Execution & Clearing, L.P., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc., Merrill Lynch Professional Clearing Corp., Morgan Stanley & Co. Incorporated, Newedge USA, LLC, Prudential Bache Securities, LLC, Scotia Capital (USA) Inc., UBS Securities LLC and Virtu Financial BD, LLC have each signed an Authorized Participant Agreement with the Trust and, upon the effectiveness of such agreement, may create and redeem Baskets as described above."

ETF Securities USA is the sponsor and, once again, the trustee is BNY Mellon. Additionally, our old friend JPMorgan is the custodian of this ETF, too.

As of 1/1/13, the SGOL held 36.455 metric tonnes of gold in "inventory". As of last evening, that number had fallen to 28.919 metric tonnes. This drop of 7.536 metric tonnes puts the YTD "inventory" numbers down 20.67%.

So, let me see if I've got this straight...

Two of the three largest gold ETFs show "inventory" drops YTD that are nearly identical. Prices are down about 22% and "gold in trust" is down about 21%. OK, sounds reasonable. But how do you explain this? The GLD, while also showing a -22% return for 2013, shows an "inventory" drop of almost twice as much, nearly 36%!

Looked at another way, if the GLD "inventory" was only down 21% YTD, it would still have about 1066 metric tonnes in trust. Instead, it has 866 metric tonnes. Where in the heck did the other 200 metric tonnes go??? I'd say that's a pretty good question and I look forward to reading your potential explanations in the comments of this thread.


p.s. Not listed with the funds above is the Sprott Physical Gold Trust (PHYS). This is because, technically, it's not an ETF. However, it does have a sponsor/manager (Sprott Asset Management), a trustee (RBC Dexia Investor Services Trust) and a custodian (The Royal Canadian Mint). The PHYS does not have any Authorised Participants.

On 1/1/13, the PHYS showed 50.289 metric tonnes of gold in inventory. As of last evening, that level had fallen to 49.944 metric tonnes for a drop of 0.68%. 

About the Author

turd [at] tfmetalsreport [dot] com ()


twippers · Nov 6, 2013 - 10:02am


nice to be....

· Nov 6, 2013 - 10:09am

If you've got two hours...

Here's a whole bunch of Jackass for you.

zman · Nov 6, 2013 - 10:19am


How does he explain the fact that he has made no offerings for new shares? Where is the demand for his physically backed shares? If demand for physical silver is so strong (as he claims), why haven't investors poured money into the PSLV at some point, the final conclusion is the demand is still weak.

Nick Elway · Nov 6, 2013 - 10:20am

FOFOA not watching the pot



Submitted by Turd Ferguson on November 6, 2013 - 6:47am. MODERATOR

Rather than fight and argue with people, perhaps you can comment on this excellent and interesting FOFOA post?


Thanks Turd for the excellent link. No silly silver bashing in this FOFOA..

Mudsharkbytes · Nov 6, 2013 - 10:25am

Can it be?


And public to boot?

Wish I could help on the location of the missing 200 tons.

Spent some time yesterday listening to some yayhoo at a watch store with a prominent "we buy gold" sign telling me all the reasons why gold was going to keep dropping in price because the economy was improving and the smart money is moving elsewhere. This was after he showed me some of the days bagged up jewelry that he was paying 90% of spot for from the poor saps who, according to him are coming in multiple times a day and selling their gold.

When I asked him why he was buying gold if he thought it was going to keep dropping in price he started spluttering and then took a phone call. This was after he proclaimed the cost of fuel was also going to drop when I pointed out to him that energy costs are so high many mines are currently underwater and can't turn a profit at today's prices. 

I realize he was just trying to scam me out of any gold I might have by scaring me into selling before the bottom falls out due to the *ahem*, impending economic recovery, but still! guys like this really piss me off.

Texas Sandman · Nov 6, 2013 - 10:28am

Where did the gold go?

Are you being rhetorical or pedantic here, Turd?

The obvious answer is CHINA.

The APs have another way to print money here. Redeem GLD shares for the physical stuff, and sell it at a premium in China. Lather, rinse repeat.

This doesn't even begin to take into account what they do painting the tape & manipulating to get those GLD shares at a discount in the first place.

Patrancus · Nov 6, 2013 - 10:42am

another Jackass said

what happened to the other 200 metric tons?

tyberious · Nov 6, 2013 - 10:45am

RE: If you've got two hours...

I've got 6 at my desk! Thanks

Texas Sandman · Nov 6, 2013 - 10:45am
tyberious · Nov 6, 2013 - 10:52am

Jay Taylor

Since JFK, Sinister Forces are Removing Liberty in America https://www.voiceamerica.com/episode/73875/since-jfk-sinister-forces-are... Current Episode Direct Audio Links: Hour 1 Hour 2 Jacob G. Hornberger visits for the first time while Ranting Andy Hoffman, Gene Epstein and Daniel McAdams return. As we approach the 50th anniversary of President Kennedy's murder, we will ask Jacob Hornberger, a former criminal lawyer, about his theories on who murdered Kennedy and why the CIA is covering it up. Why did the CIA never allow Nixon to see the JFK files? Is the President of the US the President, or not? Jacob has thought about the tragic Nov. 1963 event and written prolifically about it so we will seek his views. We will also seek Daniel McAdams to speculate about the significance of the JFK killing in terms of current geopolitical issues and as always, Andy Hoffman will have some issues to discuss regarding market manipulation and the effect that has had on our liberties as well as our economic well being. Economist Gene Epstein will talk about the upcoming Junto meeting and some of his recent libertarian economic views expressed in Barron's.

Peoples Front of Judea · Nov 6, 2013 - 11:02am

Who bolts for the door first ????

With the GLD now holding just 866 tonnes , at what point in the future will the first " large customer" back the truck up to the GLD to get their gold the F**k out of harms way....causing a stampede ...WHO IS GONNA BE FIRST to start the run

Saying they allow another 35% to disappear, bringing the GLD holdings down to 563 TONNES

I am thinking that this shit cant go on past MAY 22ND

but i am just am amateur at this .. less than 2 years .... WTFDIK 

ivars · Nov 6, 2013 - 11:27am

I still think its going out

I still think its going out to be lent and sold into market. If the ETF can not lend, then the gold is first sold to some of ETF parties like JPM, then lent=sold again in LBMA.


Lets see.. If Germany really gets its gold from JPM because the gold it had in the USA has been lent out or does not look likely to arrive in the case of USD collapse. Then Germany could get nasty with Obama over spying as a return of favor to JPM- if that getting nasty helps JPM in its struggle with USG over gold it has got as loan from Bush but does not want to return to USG after 5 years has expired ( since 2006, 2008) . 

I do not know..how would /could Germans by pressuring USG help in this except that part of the deal over spying and free trade somehow is rolling USG gold loan to JPM over. This issue seems not to be resolved yet, as debt ceiling was lifted only for small time during which both sides are busy strengthening their positions->hence threat of debt ceiling from one side ( =deflationary collapse at least till Obama decides to go around congress in money issuance or 2014 elections that Republicans should lose if their debt ceiling game will lead to sharp deflation via contraction of government spending) , and threats to bankers and Israel from the other side.

I am not sure if banks with huge excess reserves can suddenly start lending to businesses after /if debt ceiling is not raised. What would be the interest rate then? Who will take loan in such conditions?..

tyberious · Nov 6, 2013 - 11:30am


Palestinian Leader Yasser Arafat Was Assasinated With Radioactove Polonium, Tests Show And so another conspiracy theory, that Palestinian leader Yasser Arafat was poisoned with Polonium, becomes non-conspiracy fact. From Reuters: Palestinian leader Yasser Arafat was poisoned to death in 2004 with radioactive polonium, his widow Suha said on Wednesday after receiving the results of Swiss forensic tests on her husband's corpse. "We are revealing a real crime, a political assassination," she told Reuters in Paris. A team of experts, including from Lausanne University Hospital's Institute of Radiation Physics, opened Arafat's grave in the West Bank city of Ramallah last November, and took samples from his body to seek evidence of alleged poisoning. "This has confirmed all our doubts," said Suha Arafat, who met members of the Swiss forensic team in Geneva on Tuesday. "It is scientifically proved that he didn't die a natural death and we have scientific proof that this man was killed." She did not accuse any country or person, and acknowledged that the historic leader of the Palestine Liberation Organization had many enemies. Arafat signed the 1993 Oslo interim peace accords with Israel and led a subsequent uprising after the failure of talks in 2000 on a comprehensive agreement. Allegations of foul play surfaced immediately. Arafat had foes among his own people, but many Palestinians pointed the finger at Israel, which had besieged him in his Ramallah headquarters for the final two and a half years of his life. The Israeli government has denied any role in his death, noting that he was 75 years old and had an unhealthy lifestyle. An investigation by the Qatar-based Al Jazeera television news channel first reported last year that traces of polonium-210 were found on personal effects of Arafat given to his widow by the French military hospital where he died. That led French prosecutors to open an investigation for suspected murder in August 2012 at the request of Suha Arafat. Forensic experts from Switzerland, Russia and France all took samples from his corpse for testing after the Palestinian Authority agreed to open his mausoleum. "SMOKING GUN" The head of the Russian forensics institute, Vladimir Uiba, was quoted by the Interfax news agency last month as saying no trace of polonium had been found on the body specimens examined in Moscow, but his Federal Medico-Biological Agency later denied he had made any official comment on its findings. The French pathologists have not reported their conclusions publicly, nor have their findings been shared with Suha Arafat's legal team. A spokeswoman for the French prosecutor's office said the investigating magistrats had received no expert reports so far. One of her lawyers said the Swiss institute's report, commissioned by Al Jazeera, would be translated from English into French and handed over to the three magistrates in the Paris suburb of Nanterre who are investigating the case. ... The Al Jazeera investigation was spearheaded by investigative journalist Clayton Swisher, a former U.S. Secret Service bodyguard who became friendly with Arafat and was suspicious of the manner of his death. Hani al-Hassan, a former aide, said in 2003 that he had witnessed 13 assassination attempts on Arafat's life, dating back to his years on the run as PLO leader. Arafat claimed to have survived 40 attempts on his life. Now... whoever may have wanted the leader of the Palestinians dead? He escaped another attempt on his life when Israeli warplanes came close to killing him during the invasion of Beirut when they hit one of the buildings they suspected he was using as his headquarters but he was not there. In December 2001, Arafat was rushed to safety just before Israeli helicopters bombarded his compound in Ramallah with rockets. https://www.zerohedge.com/news/2013-11-06/palestinian-leader-yasser-araf...

Mr. Fix · Nov 6, 2013 - 11:40am

Two hours of jackass?

 Now that's something I will make time for!

 Thank you, thank you, thank you!

· Nov 6, 2013 - 11:46am

I am getting very excited

about the possibility of Joe Biden running for President in 2016, as he is currently working on cultivating the first Vice Presidential Mullet in US history:

View image on Twitter

Apparently, this is not a photoshop but the real deal. AWESOMENESS! This hair clearly needs to be President.

Look at how intimidating this is for Clinton, just look at his face- Oh, you may think at first glance that he is looking at Joe as if he is a crazy, meth-addled axe-murderer, but look closer. Bill is obviously intimidated, thinking "Damn, how can I compete with this mullet, that thing is crazy cool".

Biden 2016. Let the good times flow.

achmachat · Nov 6, 2013 - 11:48am

mullets and president...

President James Polk (the 11th President of the United States):

benque · Nov 6, 2013 - 11:49am

Vote for the hair!

Why not, as the vast majority of US citizens cast their votes for equally insignificant reasons.

By the way, it appears that even slick willy (from the look on his vile & smug face), is just barely tolerating biden's familiar touch. "Even with that hair, you ain't no Monica, but what the hell, yer prettier than Hillary. Go for it!"

achmachat · Nov 6, 2013 - 11:49am

I had no idea that

I had no idea that Thunderlips was descended from a line of ex-presidents. WOW! The resemblance is amazing!

Texas Sandman · Nov 6, 2013 - 12:03pm

RIP Thunderlips

Don't let the door hit you in the rear.

anarchitect · Nov 6, 2013 - 12:15pm


Maybe I'm missing something here, but the returns and the changes in inventory are unrelated. The fact that IAU and SGOL have seen percentage outflows that are very similar to their returns, whereas GLD has not, is simply a coincidence.

All three funds have the same return, give or take a few basis points, because their return reflects the change in the gold price.

On the inventory side, GLD has seen a larger outflow (as a percentage of its 1/1/2013 holdings) than the other funds.

ancientmoney · Nov 6, 2013 - 12:26pm

Open letter to Chilton . . .


A commenter on this thread said Diamon (sp) was also jumping ship?? I hadn't heard that anywhere else yet . . .

ancientmoney · Nov 6, 2013 - 12:51pm

Reading between the lines . . .

It is important to read everything PM/financial with a critical eye:

"Gold has a special place in Indian culture, bought as a hedge against inflation and traditionally used for gifts at weddings and festivals. Silver does not enjoy the same status.

The value of silver imports in 2012 was $1.8 billion, whereas gold imports cost $52 billion. Even record shipments of silver are therefore unlikely to put any strain on the trade deficit, in contrast to the impact of gold, which is India’s second-biggest import item after oil."



Silver does not enjoy the same status????

Let's see, the GSR today, based on current PM prices, is around 60. Yet, the ratio of importing silver:gold in India is 29:1. This means that India values silver at twice the ratio it "should."

Another deceptive story that sneakily attempts to denigrate silver, but if one is smart, you realize that silver is a much better value than gold at current prices.

SteveW zman · Nov 6, 2013 - 12:55pm

@zman: Sprott

How does he explain the fact that he has made no offerings for new shares?

Simple, the shares currently trade about 2% over NAV and need to be somewhat greater to allow an additional offering according to the prospectus. The offering costs need to be paid out of this premium so that the holdings of the existing shares are not diluted.

If demand for physical silver is so strong (as he claims), why haven't investors poured money into the PSLV at some point, the final conclusion is the demand is still weak.

You do understand this is a closed end fund whose holdings are only increased by discontinuous steps of secondary offerings?

Clarki Stomias · Nov 6, 2013 - 1:06pm

Mainstream Reports on Chinese Yuan

2 Links from Drudge:




"HSBC’s Huo said their presentations in smaller developing countries such as Turkey and Poland were met with similar interest to those in global financial centers, drawing thousands of corporate treasurers, lawyers, government officials and trade groups.

“It’s very broad interest,” Huo said. “The yuan business is linked so closely with the China story. You have to get there early.”

The People’s Bank of China now has currency-swap lines with more than 20 overseas counterparts, encouraging greater overseas use of the yuan for trade and finance."


Petro dollar epitaph? Oh and file this under the MSM's uncanny ability to pick up "breaking" stories years after they've already become apparent.

boomer sooner · Nov 6, 2013 - 1:25pm

Wonder what it would take to

Wonder what it would take to get an official accounting, pics and bar list of the 50 tonnes of Gold sent to Germany this year? Or were the shipments to start in 2014? I bet no one will ever know whether the Gold was shipped or not. Would be nice to see some of Turd's pallets for real.

HappyNow · Nov 6, 2013 - 1:53pm

I guess we'd have to look at when the GLD was growing like mad

If I want to issue shares I have to put gold on deposit with GLD.

So if I put the gold in at....pick a number....$1600.

I then issue the shares at $1600 and they trade. I am the ultimate counterparty. If nobody wants the shares I take them back. Or I can just stop selling and only buy I suppose.

Now as gold falls in price I buy them back. At $1500, at $1400, and even at $1300.

I've made $100/oz on the first, $200/oz on the second and a whopping $300/oz on the last.

Now I have all my shares again so I redeem my basket and take back my gold.

This only works if I am thinking like a short in the beginning.

Now I have my gold back and can either sit on it like a long or sell to a buyer like China. I've made a ton of money in the process.

So when was the GLD putting on weight? And who was issuing shares then?

It's worth noting that the entity pillaging gold now has to be the entity that was putting the gold in play to begin with. That is, I can only redeem my own basket, not somebody else's. (feel free to correct me if I'm wrong about that)

The Doc · Nov 6, 2013 - 1:59pm

Precious Metals and the Lost

Precious Metals and the Lost Generation


While hyperinflation or a currency crisis can take months to develop, it will ultimately catch most by surprise. Of course, those who are prepared will not be welcomed.
Hoarders will be blamed. Metals could be banned and/or taxed and, eventually, re-priced far from the futures exchanges.
The return of precious metals to monetary status will not be welcomed by those who stand to lose the most.


zman · Nov 6, 2013 - 2:08pm


Shares of PSLV, "need to be (NAV at a 2% premium) somewhat greater to allow an additional offering"

I find it very hard to believe that Sprott wouldn't do a $300 million offering if the demand was really there, I don't think he would let the NAV stop him, it makes no sense in the long term.

It's nothing more than an excuse, the demand for his investment products (PHSY and PSLV) is just not there. The NAV proves this, and the absence of any offerings also proves this fact.

His thesis of massive physical demand is not adding up, if his products are backed 100% by physical metal, where is the demand for his own investment products?

AlienEyes · Nov 6, 2013 - 2:14pm

Precious Metals and the Lost Generation

This is why the eventual legality of marijuana is a good thing. It will also make hemp ropes very affordable again. This could bring hanging / lynching back in style again. wink

Hunt brother · Nov 6, 2013 - 2:24pm

Physical Possession of Gold/Silver in IRA

Been away for a while....researching a legal structure for an IRA owner to take physical delivery of Gold Eagles and Silver Eagles while remaining inside the retirement plan.

The structure is the self-directed IRA LLC. IRA custodians that specialize in these accounts require specific documents. The key is the operation agreement of the LLC which must contain specific language to satisfy to custodian.

The IRA LLC became popular during the real estate boom, and since MF Global is being used to take physical delivery of bullion coins not prohibited by the IRS Code, Gold Eagles and Silver Eagles.

Has anyone established this IRA structure? My custodial choice has been made, and I need to hire an attorney or facilitator to create the LLC and draft documents per custodial requirement. 

The first facilitator I spotted on the web provided useful information on the strategy, but when I contacted them they pitched Silver Eagle proofs at $75 per ounce. They would allow me to lock in the price before the plan was in place. Total loss of credibility. I am not paying $75 for an ounce of silver.

I have found about five facilitators of the IRA LLC who seem credible, seeking comments from the forum on this topic.

Notice: If you do not see your new comment immediately, do not be alarmed. We are currently refreshing new comments approximately every 2 minutes to better manage performance while working on other issues. Thank you for your patience.

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