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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cliff 567Bollocks
Mar 4, 2016 - 8:26pm

Bollocks

I have been a long term lurker reading what was free, Just now I paid the $100 to thank you personally for that post beyond the PAY WALL.

I have zero need for the charts and strategy to make money off of my silver. It is mine and I am all in. I do not gamble my progeny's future. I live small that my child will live well while living small. That my grand child can live large while knowing how to live small.

I have learned much from you Bollocks, thank you for that.

cliff

Marchas45
Mar 4, 2016 - 7:40pm

@Bollocks

Knowing where you live was not for me just a question that was asked prior. Lol Don't try and make anything out off it I have enough stashed away and Saturn is away to far for me to go anyway.

@RickshawETF congrats on your first post. Also a lot of we Stackers on here stack not for profit but for survival. Keep Stacking

jaba
Mar 4, 2016 - 7:03pm

@James Crighton Re GoldMoney Delivery

James, you mention that you could only take delivery of silver bullion in 400 oz bars. Large Silver bars, are fabricated in 100 oz and 1,000 oz form, with the latter being an approx weight, as they always vary in the precise weight. But as far as I am aware, no 400 oz silver bars are fabricated? Please advise.

DAGEORGE42MiningJunkie
Mar 4, 2016 - 6:31pm

re ugly COT

am guessing theyre short more than 200k by now

stealthbear
Mar 4, 2016 - 6:25pm

Goldmoney

Thanks for the info, jc. I have an account with Goldmoney and I am really tired of filling out those FBAR forms (appropriate acronym, by the way!) every year. I am going to cash out and buy more physical before the paper price uncouples from the actual market price. No more paying for storage either.

stealth

wildstylechefAngry Chef
Mar 4, 2016 - 5:37pm
Key Economic Events Week of 10/26

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James Crightonpabste
Mar 4, 2016 - 5:36pm

@pabste

pabste - here are the facts: I bought silver through GoldMoney - stored in Singapore and London - under the understanding that I could avail myself of it at any time. When I tried to avail myself of it they told me that I could only get silver from those 2 facilities (Singapore and London) if I took delivery of 400 oz bars. I did not have enough for 400 oz but did have for a number of 1 kg bars. They said I would have to transfer my silver from Singapore and London to Switzerland (at a significant cost) and there (in Switzerland) register the bars (again, at a significant cost - about 4% of the value of the silver !!!). I am now at this stage and thought delivery would now be easy. Not so - I have had to make special application for the delivery - that application will now be "submitted to the Switzerland vault" who will "prepare a quote" for the delivery (which I am pretty sure will be a rip-off if the previous transactions are any indication). So, not a pleasant process. And, let me make this clear, NONE of this run-around that I have been given is mentioned anywhere on the site - so one buys-in in ignorance. They did not let me know of the piecemeal costs involved - if I had known of them - the transfer rip-off; the "registration" rip-off; and the "quote" rip-off - I would not have bothered with paying for the transfer to Switzerland - merely sold, repatriated the cash, and gone to the LCS and bought phyz.

So, once again I say, NEVER again shall I trust ANYONE to "store" my phyz - no matter to what extent they say it is "allocated". Reading between the lines of what I have experienced this week with GoldMoney and The Real Asset Company it is not yours until it is in your own hands. Period. ...... Caveat Emptor !

jc

Bollocks
Mar 4, 2016 - 5:12pm

Marchas

Bollocks lives on a planet called Saturn.

Even if you came there and found me, I'm not dumb enough to keep my real money at home.

May I ask why you ask? I just can't work it out...

RickshawETF
Mar 4, 2016 - 5:10pm

My First Post . . .

I think a lot of you are missing the point about Bollocks. Maybe the guy's worth a LOT, and 400 oz. is no big deal. In any case, speculating about how much he may [eventually] be able to "sell it for" quite misses the point. If everyone on this blog was to put 10% of their [paper] assets into PM's, and they "appreciate" to 10X, you are still whole (regardless of what the other 90% of your paper reverts to).

I view the currency I have converted into money as a no-brainer. Paper assets are WAY overvalued (by almost any historical metric), carry WAY too much risk, and PM's are insanely cheap. I have no idea what the future holds, but I suspect that at some point, I can trade a small amount of PMs for a lot more "stuff" -- be it food, a car, house, land, etc.

I don't dream about "making a killing" -- I just dream (as in, sleeping very soundly at night . . .)

SilveryBlue
Mar 4, 2016 - 4:59pm

Bravo SIR Bollocks

What you said about gravity equals my heart talking to me. I have never regretted my somewhat smaller entry purchases at the top of the market. I bought for the same reason if not for the same reasoning. I hold.

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