GLD "Tonnes in the Trust" Increases by 46 Tonnes

On Friday, the "tonnes in the trust" for the SPDR Gold Shares ETF (GLD) increased by an astonishing 46 tonnes, in what might be termed an "adverse reaction" to the many and varied government assurances that everything is hunky dory at mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE).Yes, a scale change was required for the chart above.

This dwarfs anything other than the second day of trading for the ETF back in November of 2004 which saw 50 tonnes added.

The only thing that comes close are two 19 tonne additions, 20 days apart, back in January of 2006, an 18 tonne addition in November of last year, and 52 tonnes added over a period of five days last September, just as the credit crisis was piking up steam.

This brings the total "tonnes in the trust" to 702, also a new record high.

This is a pretty astonishing increase, particularly after the buying over the last month or so. A total of 100 tonnes have been added in the last twenty days of trading and this brings the year-over-year increase to more than 200 tonnes.

Full Disclosure: Long GLD at time of writing.

 

 

Comments

[Leif Peterson:]

This is an interesting observation and is most likely explained by a combination of FNM, FRE, unobserved but known write downs still to come after the housing credit burst, dollar devaluation, oil, and Iran. As the new global fiat currency shifts from the West to East, gold and other precious metals (PM) may become stronger parameters in the equation. However, until gold changes from being a commodity, there will always be high risk from profit taking. Just look at what happened mid-March 2008 this year when gold reached $1000 per Troy ounce, and the big movers decided to take some (significant) profit. A word to the unwise: Be careful, and never have more than 20-30% gold(silver) in your portfolio gold/silver. It's price can come down in gangbusters within 15 minutes. For technical analysis, I have learned that if the ultimate oscillator exceeds 70, then dump your gold. This would have saved a lot of people during the March profit taking.

2008 Jul 13 09:54 AM

[sliman:]

With this new demand for gold, why hasn't it broken to a new high?

2008 Jul 13 10:15 AM

[sorgmot:]

Because gold demand is seasonal and now is the slow season. Look for gold prices to increase from now to next March.

2008 Jul 13 11:38 AM

[Ant1967:]

I am a novice investor, however it seems instinctual to invest in gold due to the chaotic market, oil prices and geo political instability. Gold seems to be a safe harbor.

2008 Jul 13 01:49 PM

[sandspider:]

Gold in normal times is a poor investment. But with the dollar decline due to many reasons most of which involve printing presses going around the clock. If we calculate M-3 before the change we have an increase of over 17%. Unemployment reported (U-3) is but 5.5% but the unreported by the news the (U-6) is 9.7% and if you consider the long term unemployed which under Clinton they quit reporting unemployment would stand at 13.7% and we have the nonborrowed bank reserves at a negative 130 Billion. Last year there was a surplus of 40 billion. The official by todays accounting of CPI (inflation) is 4.2% but if you calculate it as it was before Mr. Carter it would be 11.5%. Remember we don't weigh in food or fuel or tax as we once did. Wait till the Middle Eastern Union get their new currancy running after all the Kuweit dinar is $3.4 for one now. This new union is going to include all the rich nations of the middle East like the ones building new cities from scratch (UAE, Jordon, Kuweit, Qutar, Saudi etc) Hang on Euro. Who is going to buy our debt now? After all I hear that 22% of the non-treasury securities is junk debt. Are these normal times. Got Gold? Hmmm, do I smell Rome burning or is it just that the "king" has no clothes and he just farted?

2008 Jul 13 02:25 PM

[secmaven:]

Twin factors are driving the gold price right now: the war premium that is being priced into oil and the politically uncertain future that the US is facing. If the market decides that war with Iran is a no go and that Obama is electable, gold will drop as the war premium disappears and the expectation that Democratic control mans US taxpayers with funds to invest in hedge funds will be sending the money to DC instead.

2008 Jul 13 10:01 PM

[gpadave:]

5

2008 Jul 14 12:32 PM

[gpadave:]

Lots of good thoughts in blogs with data and analysis. I am retired and use gold(gld) as a universal form o cash. After all it is liquid currently way more predictable than paper money. and comes the closest to keeping my buying powereven. I also hold sizable numbers of treasuries not for profit but to protect against certain scenarios. 15-20% seems right for each of these plays

2008 Jul 14 12:41 PM