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

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  92 Comments

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Island Teal
Mar 7, 2016 - 10:42am

What - No Fee Fee

Gold Money = a Bank

A Fee for Fees

Might as well buy from Franklin Mint

James CrightonSteveW
Mar 6, 2016 - 3:24am

@SteveW

Steve, the situation I refer to is not having been informed (either verbally - over the phone - or via the website) that I would not be able to take delivery of the gold I had stored with them in Singapore / Hong Kong and London - thus incurring significant costs by having to transfer elsewhere before having to register and then being "considered" for good delivery - i.e. having to "apply" for taking delivery - and, incidentally, still having been informed whether my "application" has been successful and what I will have to pay for the delivery. People should be aware of this less than stellar process and disclosure.

jc

SteveW
Mar 5, 2016 - 11:39pm

Goldmoney

https://www.goldmoney.com/images/media/Files/Our-Fees.pdf

Looks like there is a 1.25% fee for vault to vault transfer of silver. Also a fee of 1oz silver is charged any time a good delivery bar is registered. Without any more information this suggests that as far as silver goes they only deliver 1000 oz good delivery bars, whose weight needs registering since it is about 1000 oz.

First time I've checked the site so I can't say if it dates back to the beginning.

James Crightonjaba
Mar 5, 2016 - 12:11pm

@jaba

Jaba - the situation is as recorded. I will let you know of progress. As of now, I have received no "quote" for delivery of my "my" silver.

The website certainly does not make clear the situation I have encountered. Go figure.

jc

Mar 5, 2016 - 11:14am
jaba
Mar 5, 2016 - 3:40am

@ James Re GoldMoney

James, Grateful you keep us all up to date as things progress. If GoldMoney are not being upfront on their website re the in/outs/limitations on physical withdrawals, they are not doing themselves any favours. Are you sure their web site does not cover all the issues that you have come up against? I had it in my mind to consider GoldMoney, later this year, as a possible way to diversify the storage and geographical location of a portion of my physical silver which is all in 1000 oz bars. So I am keenly interested in your experience.

James Crightonjaba
Mar 5, 2016 - 12:41am

@jaba - 1000 oz silver

Jaba - this was over the phone - and yes, I think you are right, it was probably the 1,000 oz bar they said they could only use to deliver from Singapore (or was it Hong Kong - can't remember but doesn't really matter, it was one of the two and, either way, I did not have enough) and London - this magnifies the situation I described. The practicality of the situation was that I did not have sufficient in storage to meet their minimum requirement - a situation I had not been made aware of before-hand and which has precipitated the present situation and still I don't have the "quote" to take delivery of my silver (12 Kg - it had been nearly 14 kg prior to the fees they have taken off in the transfer from Singapore and London to Switzerland and then the registering. And, as I say, I still don't know what I will have to pay for the delivery - the "quote" will reveal much. And, once again I emphasize how none of this hassle has been mentioned to me before nor is the information readily available on the website actually, don't know if it is available at all on the website - still have not found anything.

jc

DickB
Mar 4, 2016 - 9:11pm

@bollocks & ag1969

That's a Tasmanian house, surely, ag1969... ?

Living in Tasmania, as far south as is reasonably possible (without going to NZ) we are close to the bottom of the world, and it is here that heavy metals (gold, silver, etc.) will gravitate toward - correct, Bollocks?

Haven't seen Bollocks in Tasmania - the water's too cold.

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ag1969
Mar 4, 2016 - 8:50pm

Hey Marchas

Bollocks Lives here:

He used to store that man sized load of gold in the attic until his house tipped over. Now nobody knows where it is, but as you can see, lots of people have been digging in his yard to see if they can find it.

cliff 567Bollocks
Mar 4, 2016 - 8:33pm

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