Digging Deeper Into The Gold ETFs

85
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.

TF

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

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  85 Comments

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silver66
Nov 6, 2013 - 10:40pm

Silverfoil Hat

$9,000,000,000,000 MISSING From The Federal Reserve SHOCKING FOOTAGE

found this tonight

Silver66

heard no reference to 9 trillion in the video but the lady says they can't audit the fed cause they do not have jurisdiction...Hmmmm

DeaconBenjamintyberious
Nov 6, 2013 - 10:25pm

Why did the CIA never allow Nixon to see the JFK files?

After E. Howard Hunt's death, Howard St. John Hunt and David Hunt stated that their father had recorded several claims about himself and others being involved in a conspiracy to assassinate President John F. Kennedy.[3][56] Notes and audio recordings were made. In the April 5, 2007 issue of Rolling Stone, Howard St. John Hunt detailed a number of individuals purported to be implicated by his father including Lyndon B. Johnson, Cord Meyer, David Phillips, Frank Sturgis, David Morales, William Harvey, and Lucien Sarti.[3][57] The two sons alleged that their father cut the information from his memoirs to avoid possible perjury charges.[56] According to Hunt's widow and other children, the two sons took advantage of Hunt's loss of lucidity by coaching and exploiting him for financial gain.[56] The Los Angeles Times said they examined the materials offered by the sons to support the story and found them to be "inconclusive".[56] However, the sons do have audio tape of their father's confession, which has been widely circulated on the internet. With E. Howard Hunt on his staff, why would Nixon need the CIA files on the Kennedy asssasination?

Magpie
Nov 6, 2013 - 9:37pm

Fukushima: Ten times as much Cesium-137 as Chernobyl

"Did you ever play pick up sticks?" asked a foreign nuclear expert who has been monitoring Tepco's efforts to regain control of the plant. "You had 50 sticks, you heaved them into the air and than had to take one off the pile at a time.

"If the pile collapsed when you were picking up a stick, you lost," he said. "There are 1,534 pick-up sticks in a jumble in top of an unsteady reactor 4. What do you think can happen?

https://www.telegraph.co.uk/news/worldnews/asia/japan/10430590/Decommiss...

Bugzy
Nov 6, 2013 - 9:24pm

Gent

Because they do not have what they claim to have. That is why they need to sell it at a low price. If they did not, there would be shortages and the price would go up and everyone would want to own Gold, and there aint none left and then the truth would come out and heads would role and Gold would be hugely expensive and the $ would collapse and the stock market and their privileged lifestyles.

So they need to convince people like your son to not like Gold, who can then try and get you to seriously question why you bought it.

They have no choice but to sell it. The consequences of not selling means doom. Quicker.

Gent
Nov 6, 2013 - 9:06pm

Gold ETF holdings...Puzzlements

First, let me state that , like most of yous, I'm a Gold/Silver bug who's stacking not just for insurance but for potential high profits in the future. I'm more into silver with the supply and demand factor being a main part of my thinking.

Now, a couple of questions for my own edification and to gain some answers to anti-pm'ers ... such as my own son.....

The AP's of the etf's are the only ones who can take phyzz out which must be going on since the inventories are diminishing. So, what are they doing with it? .. Selling it? Storing it for themselves?

If it's thought that they're selling it .. to the BRICS or whoever .. WHY?

And here's my son's argument ....

'Dad, there are many, many smart and rich people in the world. Some of them like pm's, some don't. Sure, BRICS are buying/importing tons of pm's but, someone who doesn't care to have it is selling it to them. Thus, put the buyers and sellers together, see what the going price of gold is and there you have it's current value. You've lost lots of value over the past couple of years and I'm worried for you, Dad'

Asking for help in replying to my son .. who's damn smart!!

Bollocks
Nov 6, 2013 - 7:51pm

Possible Arafat poisoning now reported by BBC

Yasser Arafat 'may have been poisoned with polonium'

The late Palestinian leader Yasser Arafat may have been poisoned with radioactive polonium, says a Swiss forensic report obtained by al-Jazeera.

Arafat's official medical records say he died in 2004 from a stroke resulting from a blood disorder.

But his body was exhumed last year amid continuing claims he was murdered.

The Swiss report said tests on the body showed "unexpected high activity" of polonium, which "moderately" supported the poisoning theory.

Many Palestinians and others have long believed that Israel poisoned Arafat. Others allege that he had Aids or cancer. Israel has consistently denied any involvement.

A spokesman for the Israeli foreign ministry said the Swiss investigation was "more soap opera than science".

https://www.bbc.co.uk/news/world-middle-east-24838061

Key Economic Events Week of 8/10

8/10 10:00 ET Job openings
8/11 8:30 ET Producer Price Idx
8/12 8:30 ET Consumer Price Idx
8/13 8:30 ET Initial jobless claims
8/13 8:30 ET Import Price Idx
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Unit Labor Costs
8/14 8:30 ET Cap Ute and Ind Prod
8/14 10:00 ET Business Inventories

Mr. Fix
Nov 6, 2013 - 7:17pm

So why do we have a NSA? They can't fix stupid.

Biden Congratulates Boston Mayor-Elect, But Calls Wrong Person

(BOSTON) -- Marty Walsh was sitting at home Tuesday night watching election returns when his phone rang.

“You son of a gun, Marty! You did it! Congratulations,” Vice President Joe Biden said.

Biden was calling to congratulate the new mayor-elect of Boston, Marty Walsh, but it turns out he called the wrong Marty Walsh.

The Marty Walsh Biden phoned is president of Gateway Public Solutions in Boston and a former aide to Sen. Ted Kennedy. He often gets mixed up for the soon-to-be mayor.

“I said to my wife, ‘Wouldn’t it be funny if I started getting a couple of calls from people mixing myself up with Mayor-Elect Marty Walsh?’” Walsh told ABC News.

Soon after, he received a call from a number with a blocked ID that ended up being an operator from the White House.

“This is the wrong Marty Walsh,” Walsh says he told the operator who likely would have connected him to President Obama. “I’m happy to get you the right number.”

Ten minutes later, Biden called from Washington, D.C.’s 202 area code. “Thank you, but this is the wrong Marty Walsh,” Walsh told him before giving the vice president the correct number for the mayor-elect.

Walsh later got phone calls from the mayor of Minneapolis and DNC Chairwoman Rep. Debbie Wasserman Schultz.

Walsh said the mix-up happens all the time since he works in politics and the mayor-elect used to be a state representative. And there are even more Marty Walshes in Boston who could be facing similar problems.

“I should probably try to figure that out. My father is Marty Walsh, the mayor-elect’s uncle is Marty Walsh. Needless to say there are a lot of Marty Walshes in Boston,” he said.

silver66silver foil hat
Nov 6, 2013 - 7:13pm

@silver foil hat

Thanks for posting that link, I recall a YouTube video of a British MP asking about 15 Trillion(?) of laundered money thru HSBC(??). I wonder if this is related.

3 or 4 years ago I was rooting around the web and came across a website with a .pdf of a letter Kennedy and several other important people and monetary authorities had signed with the Chinese for a gold loan. I kick myself regularly for not bookmarking that page

Silver66

Bollocks
Nov 6, 2013 - 6:50pm

Matt's back :)

Chase Isn't the Only Bank in Trouble

By Matt Taibbi POSTED: November 5, 12:55 PM ET I've been away for weeks now on a non-financial assignment (we have something unusual coming out in Rolling Stone in a few weeks) so I've fallen behind on some crazy developments on Wall Street. There are multiple scandals blowing up right now, including a whole set of ominous legal cases that could result in punishments so extreme that they might significantly alter the long-term future of the financial services sector.

As one friend of mine put it, "Whatever those morons put aside for settlements, they'd better double it."

Firstly, there's a huge mess involving possible manipulation of the world currency markets. This scandal is already drawing comparisons to the last biggest-financial-scandal-in-history (the Financial Times wondered about a "repeat Libor scandal"), the manipulation of interest rates via the gaming of the London Interbank Offered Rate, or Libor. The foreign exchange or FX market is the largest financial market in the world, with a daily trading volume of nearly $5 trillion.

Regulators on multiple continents are investigating the possibility that at least four (and probably many more) banks may have been involved in widespread, Libor-style manipulation of currencies for years on end. One of the allegations is that traders have been gambling heavily before and after the release of the WM/Reuters rates, which like Libor are benchmark rates calculated privately by a small subset of financial companies that are perfectly positioned to take advantage of their own foreknowledge of pricing information.

More here: https://www.rollingstone.com/politics/blogs/taibblog/chase-isnt-the-only...

Dyna mo hum
Nov 6, 2013 - 6:42pm

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Key Economic Events Week of 8/10

8/10 10:00 ET Job openings
8/11 8:30 ET Producer Price Idx
8/12 8:30 ET Consumer Price Idx
8/13 8:30 ET Initial jobless claims
8/13 8:30 ET Import Price Idx
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Unit Labor Costs
8/14 8:30 ET Cap Ute and Ind Prod
8/14 10:00 ET Business Inventories

Key Economic Events Week of 8/3

8/3 9:45 ET Markit Manu PMI July
8/3 10:00 ET ISM Manu PMI July
8/3 10:00 ET Construction Spending
8/4 10:00 ET Factory Orders
8/5 8:15 ET ADP employment July
8/5 9:45 ET Markit Service PMI
8/5 10:00 ET ISM Service PMI
8/6 8:30 ET Initial jobless claims
8/7 8:30 ET BLSBS for July
8/7 10:00 ET Wholesale Inventories

Key Economic Events Week of 7/27

7/27 8:30 ET Durable Goods
7/28 9:00 ET Case-Shiller home prices
7/29 8:30 ET Advance trade in goods
7/29 2:00 ET FOMC Fedlines
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7/31 8:30 ET Core inflation
7/31 9:45 ET Chicago PMI

Key Economic Events Week of 7/20

7/21 8:30 ET Chicago Fed
7/21 2:00 ET Senate vote on Judy Shelton
7/22 10:00 ET Existing home sales
7/23 8:30 ET Jobless claims
7/23 10:00 ET Leading Economic Indicators
7/24 9:45 ET Markit flash PMIs for July

Key Economic Events Week of 7/13

7/13 11:30 ET Goon Williams speech
7/13 1:00 ET Goon Kaplan speech
7/14 8:30 ET CPI for June
7/14 2:30 ET Goon Bullard speech
7/15 8:30 ET Empire State and Import Price Idx
7/15 9:15 ET Cap Ute and Ind Prod
7/16 8:30 ET Retail Sales and Philly Fed
7/16 11:00 ET Goon Williams again
7/17 8:30 ET Housing Starts and Permits

Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
6/30 9:45 ET Chicago PMI
6/30 10:00 ET Consumer Confidence
6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
7/2 10:00 ET Factory Orders

Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
6/22 10:00 ET Existing home sales
6/23 9:45 ET Markit flash PMIs for June
6/23 10:00 ET New home sales
6/25 8:30 ET Q1 GDP final guess
6/25 8:30 ET Durable Goods
6/26 8:30 ET Pers Inc and Spending
6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
6/16 8:30 ET Cap Ute and Ind Prod
6/16 10:00 ET Chief Goon Powell US Senate
6/16 4:00 pm ET Goon Chlamydia speech
6/17 8:30 ET Housing Starts
6/17 12:00 ET Chief Goon Powell US House
6/18 8:30 ET Initial Jobless Claims
6/18 8:30 ET Philly Fed
6/19 8:30 ET Current Account Deficit
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Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
6/9 10:00 ET Wholesale inventories
6/10 8:30 ET CPI for May
6/10 2:00 ET FOMC Fedlines
6/10 2:30 ET CGP presser
6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
6/12 10:00 ET Consumer sentiment

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