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

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

  85 Comments

  Refresh
Bollocks
Nov 6, 2013 - 6:30pm

ZH

Cognitive Dissonance For 5 Year Olds

Submitted by Tyler Durden on 11/06/2013 16:31 -0500

Presented with no comment...

silver foil hat
Nov 6, 2013 - 6:28pm
Mr. Fix
Nov 6, 2013 - 6:25pm

WE ARE CLOSE TO THE END

WE ARE CLOSE TO THE END – JAY TAYLOR

NOVEMBER 6, 2013 BY THE DOC LEAVE A COMMENT

How do you survive and possibly thrive in this environment of theft and wealth transferring and extreme market manipulation?
You have to recognize that there is manipulation going on and try to understand what it is and then act accordingly.
And of course the masses of people don’t get it, they don’t believe it. They’re content to take at face value what they’re told by the mainstream media and what people really have to understand is that the manipulation is systemic. It is the fiat currency itself is a manipulative tool that allows those to control fiat money to reallocate wealth from those that produce it; I would like to say the miners, the manufacturers, the farmers, the inventors, people that are actually doing things that are of value to other human beings are not getting their fair share. Instead the government and the Federal Reserve and the banking system, that has control and has first dibs at new money creation that really end up becoming more and more wealthy. So just by being in the system and holding dollars you are being taken advantage of. [Read more...]

ancientmoney
Nov 6, 2013 - 5:50pm
Hunt brother
Nov 6, 2013 - 5:48pm

time is running out on GLD

  • Reply to: Building Pressure GLD scam is 300 years old by Hunt brother 25 weeks 5 days ago

    The goldsmiths of the 1700's would store gold for others and issue paper claims exchangeable for gold.

    The goldsmiths knew not everyone would want their gold back at once and began issuing multiple paper claims on the same gold.

    the goldsmiths began lending the gold and collecting interest. They became the wealthiest people in the village.

    thIs is the genesis of fractional reserve banking.

    to today...the goldsmiths have little gold and massive paper claims.

    people want their gold back. This will destroy the entire banking system!

meluaufeet
Nov 6, 2013 - 5:43pm

CFTC - Chilton - Goodbye letter - Position limits - JPM

The goodbye letter from Chilton has made me think about the JPM gold book... Chilton really sounded as though he is comfortable that position limits WILL happen soon. Would that not imply that JPM will have to reduce a large position? If so... don't they need the POG to rise??? If not... then what? Thank you for your consideration in this matter.

silver foil hat
Nov 6, 2013 - 5:40pm

When the audit was complete...

Thee 200T of IAU became 200T of IW

(W=Tungsten)

ancientmoneyTF
Nov 6, 2013 - 5:18pm

Re: Dave in Denver on ETFs . . .

"Think about the implications for that if there's a real run on GLD's gold."

-----------------------------------------------------------------------------

The only run that can be made on GLD's gold is by APs, who are all bankers. And, the Custodian (HSBC) can simply commandeer the phyzz gold still remaining, and pay out the shareholders in cash--as per the prospectus, then the trustee (another bank) can simply close it down.

No harm, no foul. Nice deal for the colluding banksters. Same situation at SLV, except JPM is the custodian holding all the cards.

ancientmoney
Nov 6, 2013 - 5:11pm

@tyberious re: time will tell . . .

Time indeed reveals all.

It sure seems like a lot of folks are getting tingly-feelings about mid-November as the period to begin a lot of change.

This planned takedown of the grid is a doozy . . . we know the Sandy Hook shooting, Bostonbombing, and other FF events all had official "drills" going on nearby when the "events" occurred.

So, does the grid drill go "live?"

Nov 6, 2013 - 5:08pm

Dave in Denver

I sent this post off to him to see what he thought. Below is a c&p of his reply. He raises some interesting points.

It's interesting that the inventory drops in IAU and SGOL are more in line with the drop in the price of gold, but is that because they are more honestly operated or because their diminutive size vs. GLD makes it more difficult to operate a fractional bullion system out of the vaults? I dunno.

I'm sure the legal structure of three prospectuses are all very similar. I would also bet that the gold being drained from IAU and SGOL is ending up in Asia as well in the bullion bank private vaults. There's just no way in hell to tell or even legally force disclosure on the matter.

To me the much more interesting storyline is to what extent is the 866 tonnes being reported by GLD actually physical gold that is entirely unencumbered by any sort of paper claim sitting in HSBC's vault and the vaults of HSBC's sub-custodians? Again, there's no way to legally force disclosure on that, which you'll see if you read the prospectus carefully.

And what's really amazing this last point is that the ONE time that GLD could try and prove to the world that it conducts its business honestly and the way everyone has been led - or mis-led - to believe - is when Bob Pisani was in HSBC's vault, live on camera and supposedly in the GLD part of the vault and he randomly picks up a bar from stack that he was told was a GLD stack and the serial number indicated that the bar did not belong to GLD. I'm amazed at how little was ever made of that. It was the one time that we've even been able to see a live camera inside the GLD vault to see what's really there and what are the odds out of the roughly 75,000 of bars that GLD that are supposedly in the vault that belong to GLD, what are the odds that he picks up the ONE bar that was mistakenly placed on the GLD stack? That was live proof that GLD is a fraud.

I already know for a fact that GLD is about 9% short on gold because the short interest in GLD shares is about 9%. Shorted shares are required to be covered by gold. Think about the implications for that if there's a real run on GLD's gold.

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 5/25

5/26 8:30 ET Chicago Fed
5/26 10:00 ET Consumer Confidence
5/27 2:00 ET Fed Beige Book
5/28 8:30 ET Q2 GDP 2nd guess
5/28 8:30 ET Durable Goods
5/29 8:30 ET Pers Inc and Cons Spend
5/29 8:30 ET Core Inflation
5/29 9:45 ET Chicago PMI

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

Recent Comments

by Woyzeck, 1 min 20 sec ago
by Angry Chef, 2 min 57 sec ago
by Angry Chef, 5 min 24 sec ago
by Silver Monkey, 5 min 50 sec ago
randomness