Massive Inflows Into GLD

92
Fri, Mar 4, 2016 - 11:24am

I was already planning to write a public article today about the massive additions to GLD "inventory" in 2016. But now, with news hitting about Blackrock's gold ETF, writing this post has clearly become a priority.

So, before we get started, be sure to review this: https://www.zerohedge.com/news/2016-03-04/blackrock-suspends-gold-etf-is...

Here's the full press release from Blackrock: https://www.businesswire.com/news/home/20160304005402/en/Issuance-IAU-Go...

As ZH states: "It appears the huge demand for physical gold (and lack of supply) is finally catching up with the manipulation of paper prices. If this is anything other than a brief technical suspension, it could well unleash panic buying and as we already pointed out - there is no physical gold!"

I guess we'll just have to see what happens next. However, as we've maintained for years, all it will take is ONE delivery failure and the entire Bullion Bank confidence scheme will come crashing down. While this news today is not technically a delivery failure, all of this surging demand for gold certainly seems to be pushing The Banks to the brink.

To that end...the topic of today's post...

We've long maintained that the GLD is nothing but a bank-sponsored vehicle for syphoning away investment demand from actual, physical gold. Allegedly, the GLD saw massive inflows of "gold" up until 2012 and then it saw its "inventory" cut in half between 2013 and 2015. We've wondered from where the GLD and its custodian, HSBC, would source new gold WHEN investment demand for gold finally returned. It now appears that we are in the early stages of getting our answers.

To that end, please consider the incredible alleged inflows of "gold" into the GLD in 2016.

As noted above, the GLD stated that it held 1,349.92 metric tonnes (mts) of "gold" in its "inventory" on January 1, 2013. As price was smashed lower over the next three years, the GLD "inventory" moved lower, too, reaching a low of just 630.17 mts on December 17, 2015. Now let's stop right there for a moment and consider the significance of the date, December 17, 2015. What happened on that date? Why does that sound so familiar?

Oh, yah. I remember now. December 17, 2015 was the day following the announcement from Mother Fellen that her Federal Reserve was raising the Fed Funds rate for the first time in nearly 10 years. What did the chart look like on that day? See below for one from the archives:

So, what happened the day after that, Friday, December 18? Not much. Gold rallied back a little and closed higher at 66. N0t much to get excited about. Price was barely off the lows of 50 seen the day before and every purported "analyst" was projecting triple digit gold prices for 2016.

But not us at TFMR. In fact, we'd already been calling for a January rally and something else happened on December 18 that really got our attention. For the first time in nearly two months, there was an addition to the GLD "inventory" that day. And we weren't talking just a few ounces. That day, December 18, saw a GLD addition of 18.74 metric tonnes, growing the alleged "inventory" by nearly 3%. Here are c&ps of two comments we added to that evening's podcast thread:

WOWOWOWOWOWOW!

Submitted by Turd Ferguson on December 18, 2015 - 4:57pm.
15
That has to be just about the largest one day addition of "gold" ever seen!

Maybe an AP paying back a big short?

More significantly, maybe another sign of the possible bottom discussed in this podcast???

And

I'm looking back over my notes from the past few years

Submitted by Turd Ferguson on December 18, 2015 - 5:04pm.

Today's HUGE dump of gold INTO the GLD is a very good sign of an impending rally. Back in January, the GLD added 9.56 mts on Jan 15, 13.74 mts on Jan 16 and 11.35 mts on Jan 20.

Other significant additions occurred in April and September. Nothing even close to 18.74 mts in a single day. And how about the timing? Big final washout yesterday following the rate hike. Price recovers 1.5% today and GLD "inventory" grows by 3%. Hmmmm.....Will be chewing on that over the weekend.

So, now, he we are on March 4, 2016 and price is $1275 as I type. That's up $225 or 21.4% from the lows December 17. And what has happened to the GLD "inventory"?

  • It added 4.76 metric tonnes just yesterday
  • This brings the total addition for just this week to 30.93 mts
  • For all of 2016, the GLD "inventory" has now grown by over 150 mts
  • And since the low of December 17, total "inventory" has now grown by 163.16 metric tonnes

(Leaving aside that it will take Germany over seven years to repatriate 300 metric tonnes and the GLD has allegedly dug up more than half that amount in less than ten weeks...)

And now let's look at an updated chart with the addition of just one, simple notation:

At a time when global demand continues unabated, with China, Russia, India and others all importing gold on a monthly basis, the GLD has managed to add 163.16 metric tonnes to its "inventory". How much gold is that? About 5,246,000 troy ounces. How much is that? Well, there are 400 troy ounces in every London Good Delivery bar so we're talking about more than 13,000 of these:

And if you stack 192 of those bars onto a pallet, you'd fill over 68 of them:

That's A LOT of gold...again, all at the same time as Russia and China both import about 20 mts per month: https://smaulgld.com/russia-increases-gold-reserves-by-ounces-in-january... and India imports up to 100 mts per month: https://www.business-standard.com/article/markets/gold-import-bill-up-12...

Where the heck do you suppose all of this gold is coming from???

Look, if you can't see that the Bullion Banking Confidence Scheme is seemingly hanging by a thread, then I'm not sure there's much I can do to help you. Additionally, if you continue to own ETFs as a proxy for the real thing, the day is coming when you're going to find yourself supremely frustrated and angry. When the music stops, you're going to be left standing without a chair to sit on.

All signs point to 2016 indeed being the "year of consequence" that we forecast. Perhaps The Banks can keep their scheme going a bit longer, perhaps not. Just yesterday, they added nearly 26,000 contracts of open interest (paper obligations of 2.6MM ounces or an additional 81 metric tonnes) to the Comex in a seemingly desperate attempt to contain price and, by extension, suppress sentiment and physical demand. Will it work? Will they soon be able to play their old tricks of reversing and smashing price, thereby "calming the storm"? Or, instead, will price continue to rocket forward with increasing speed as The Banks get squeezed for once? We're likely not going to have to wait too long to find out.

For today, let's just leave it here:

Continue to prepare accordingly by stacking physical metal, not paper certificates.

TF

About the Author

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  92 Comments

Mar 4, 2016 - 11:27am
arch stanton
Mar 4, 2016 - 11:33am

wow

first idiot. sold my miners two weeks ago with sinclair wispering in my ear "this may be the rally you don't sell"

ag4me
Mar 4, 2016 - 11:35am

2nd idiot

Endeavor Silver up 16% today!

Nick Elway
Mar 4, 2016 - 11:40am

turd idiot

Thanks for the insight.

Quote:
We've wondered from where the GLD and its custodian, HSBC, would source new gold WHEN investment demand for gold finally returned. It now appears that we are in the early stages of getting our answers.
canary
Mar 4, 2016 - 11:42am
Swift Boat Vet
Mar 4, 2016 - 11:44am

Smash?

I think not a large one, if any at all. Of course profit taking but how much at this point? Enough to turn prices drastically down? Just decided, gonna buy several tubes of either rounds or ASEs.

Swifty

brokerk22
Mar 4, 2016 - 11:46am

This

may be the rally you dont sell. Turd hate to point this out but the COT may not be very useful IMO. You have been calling for the market to go down for weeks and it has ripped higher. This is by no means an attack on you. You do excellent work and I am a happy subscriber. But you have to call it out sometimes.

JQuest
Mar 4, 2016 - 11:46am

The Battle is on!

The PPT has had it's hands full this morning, you can tell by the buy/sell action by the tick they are battling this PM surge with all they've got setting caps and then fall back when caps are broken then setting new caps, this is a real war!

JQ

shallow_explorer
Mar 4, 2016 - 11:48am

Zero Hedge Mole Hill

Looks like another mountain made out of a mole hill by ZH. Technically, the demand isn't for Au, but rather it is for ETF shares, as the first sentence of the Black Rock IAU PR reveals:

"iShares Delaware Trust Sponsor LLC, in its capacity as the sponsor of iShares Gold Trust (IAU), has temporarily suspended the creation of new shares of IAU until additional shares are registered with the Securities and Exchange Commission (SEC)."

Later in the PR:

"Under the ’33 Act, subscriptions for new shares in excess of those registered requires additional filings with the SEC.

"This surge in demand has led to the temporary exhaustion of IAU shares currently registered under the ’33 Act. We are registering new shares to accommodate future creations in the primary market by filing a Form 8-K to announce the resumption of the offering of new shares."

So what do we know? IAU is getting popular. It has reached its registered share limit. It can't issue more shares until it registers them with the SEC. But this has nothing to do with demand and/or access to physical bullion. The story for Au and Ag is bullish, we don't need to lose credibility by making it out to be more than it is.

PR: https://www.businesswire.com/news/home/20160304005402/en/Issuance-IAU-Gold-Trust-Shares-Temporarily-Suspended

Mar 4, 2016 - 11:49am

Fun with options

As mentioned in Wednesday's podcast when copper broke out, I bought 500 shares of FCX.

For fun, I also bought five calls. As you can see below, I just sold them for a $400 profit and I've fully reinvested in a shot to make some more...shall we say...substantial fiat...as the chart still looks like $13 is a possibility.

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

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Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
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Key Economic Events Week of 9/30

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10/2 8:15 ET ADP jobs report
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Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
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Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
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9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
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Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
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9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
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Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits

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