Seeking Alpha

Outflows continue from the SPDR Gold Shares ETF (GLD), with investors yanking about $250M out...

Outflows continue from the SPDR Gold Shares ETF (GLD), with investors yanking about $250M out during the week ended June 3. The fund has $45B AUM now compared to $72B at the year's start. In China, regulators have approved the launch of its first gold bullion ETFs. Physical gold demand in Asia is booming this year even as investor demand evaporates. The yellow metal's off 1.1% to $1,371/ounce.
Comments (20)
  • filipo
    , contributor
    Comments (2876) | Send Message
     
    I read the link "investors yanking" and what amazes me is that according to that article, investors prefer equities now over gold because they expect a thriving economy.
    Well, judging from the plunging equity market, that is not my analysis.
    What I think, is that the higher yields on Government debt (Treasuries, Gilts, JGBonds...) have made leveraging a hazardous and costly adventure and that a lot of leveraged players are leaving the playground, be it in bonds, equities, gold, all asset classes.
    Since paper gold is the smallest market of them all, the damage will be the least here.
    11 Jun 2013, 09:15 AM Reply Like
  • The_Hammer
    , contributor
    Comments (3854) | Send Message
     
    China will be accumulating more gold to back their currency while bernank prints $3 billion of e-paper today.
    11 Jun 2013, 09:26 AM Reply Like
  • Trappist1
    , contributor
    Comments (22) | Send Message
     
    Bloomberg already reporting earlier that part of the SPDR outflows are part of the arbitrage vs the Shanghai premium over spot.

     

    Big HF buys GLD ETF, pays 0.1% cost to take physical delivery, sells local in Shanghai and cashes in on the spread.

     

    Literaly switching gold from west to east ..
    11 Jun 2013, 09:32 AM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    This purported arb cannot last, as almost none do over time.
    11 Jun 2013, 03:53 PM Reply Like
  • Trappist1
    , contributor
    Comments (22) | Send Message
     
    I don’t complain, would set-up the same trade if I would have scale of trading.

     

    Arbitrage makes market inefficiencies go away.

     

    The HF doing this trade is no more than the middle man picking up a quick $

     

    The question you should ask is who will be worse off at the end of the day. The final physical buyer (overpaying?) in Shanghai, or the (cheap?) seller of paper gold on Comex/SPRD ? Someone has to be wrong here!

     

    I think more systematic issues are arising here. The stuff I am reading recently gets me worried.

     

    What you ask aint what you are getting.

     

    Compare this with a very nice CDO/MBS cash investment of a good 5 years ago ...
    11 Jun 2013, 05:37 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    My point is that the arb (if it exists and is lucrative) will close. Those type of easy spreads cannot be exploited for long. This means that the paper and physical markets cannot maintain disparity forever - that's the mechanism of an arb - to bring a market or markets back in line. So yes, if that's what you mean by this arb making the market inefficiencies go away - so be it. That is what I meant by the arb not lasting long. That's good news for the gold market, as the paper and physical markets should be in line, not out of line. Reality is somewhat more complicated than that, given the lack of transparency in the physical gold markets. With the paper market, one can follow the price action of the futures, ETF trusts and other proxies pretty easily. I am not a shill for the paper markets, nor am I a shill for physical markets. I am just a trader not wanting to lose money, long or short, and I've managed that well.

     

    BTW, all investors in physical gold ought to be concerned about the lack of transparency in the physical gold market, and an environment that is rife with conjecture.
    11 Jun 2013, 08:16 PM Reply Like
  • The_Hammer
    , contributor
    Comments (3854) | Send Message
     
    It all does not matter until it does like when the dollar devalues slowly then suddenly like a dam or bridge collapse.
    11 Jun 2013, 09:37 AM Reply Like
  • CraigPowell
    , contributor
    Comments (100) | Send Message
     
    Gold is down ~ -5% last month in a good agreement with this forecast:
    http://tinyurl.com/nh4...
    11 Jun 2013, 10:20 AM Reply Like
  • minecanary
    , contributor
    Comments (413) | Send Message
     
    Who is surprised that the price of a certificate that says you might own gold is falling while demand for the actual physical metal is skyrocketing? Having the price of the actual metal controlled by the price of the certificate is one of the most idiotic financial decisions ever.
    11 Jun 2013, 10:40 AM Reply Like
  • kwm3
    , contributor
    Comments (2453) | Send Message
     
    The certificate says you own it and can take delivery. The problem arises in the event the certificate is rehypothecated, and several folks have the same right to the same nugget.
    11 Jun 2013, 11:58 AM Reply Like
  • Jason Burack
    , contributor
    Comments (1723) | Send Message
     
    There are more conditions than that to taking delivery of physical gold from GLD. One must own a larger amount of GLD shares in order to redeem them. I believe there is a 100k share or $10 million minimum amount before delivery is allowed.
    11 Jun 2013, 01:58 PM Reply Like
  • Jason Burack
    , contributor
    Comments (1723) | Send Message
     
    The outflows are actually bullish. The metal is being sold to Asia for a huge premium. Check out Sprott's research on this.
    11 Jun 2013, 01:56 PM Reply Like
  • Rummeljordan
    , contributor
    Comments (477) | Send Message
     
    Yeah, supper bullish. Down 10% or so YTD.
    11 Jun 2013, 03:51 PM Reply Like
  • Jason Burack
    , contributor
    Comments (1723) | Send Message
     
    The paper market is manipulated and I am talking about the long term. If you look at the COT for gold and silver over the last few months the commercials have also covered a ton. That is long term bullish too. I am sorry you are not rich in 1 year. I know no one who makes huge money in the stock market and gets rich in only one year without using massive leverage, playing with lots of OPM, etc. I was talking about how the outflows of GLD are long term bullish. But people are so myopic nowadays, no one can even wait a few years.
    11 Jun 2013, 04:09 PM Reply Like
  • Rummeljordan
    , contributor
    Comments (477) | Send Message
     
    You're right. The people who piled into gold the last couple years were really rewarded. I am sorry if you are still holding on to it for an inflation hedge, it sure looks like troubled times going forward for the yellow stuff.

     

    Im in it for the long run, pal, none of this get rich quick crap.

     

    You hold your gold, check back with me in a few years. Ill be compounding interest along the way, and so should you!

     

    Only trying to help. We are all navigating the markets together.
    11 Jun 2013, 08:07 PM Reply Like
  • vector2
    , contributor
    Comments (5) | Send Message
     
    I don't think the majority of SA readers have an issue with being a long-term investor. It's because of my long-term horizon that I would never have more than a couple percent of my entire portfolio invested in gold (and that portion would certainly be physical and not paper). I simply cannot understand why anyone would be comparatively bullish on gold compared to other vehicles 'especially' in the long-term. Since Bretton-Woods, gold has appreciated 1600%. Stocks with dividends reinvested since that time are up >6000%. And let's not forget that the dollar lost 60-80% of its real value in the last 40 years to boot. Where's the real comparison? The only arguments gold bugs put up are bogeymen about BB and the fed and some sort of inevitable dollar crash that's supposed to scare everyone. Meanwhile, those who are long/short gold in short-term (based on sentiment/technicals) and long (a small amount of) physical gold in the long-term are the ones who are maximizing their expected value.
    12 Jun 2013, 02:47 AM Reply Like
  • solarcircle
    , contributor
    Comments (290) | Send Message
     
    I'm holding my physical and at some point the chickens will come home to roost and the price will do an about face and surprise those fools. The sheeple are being fleeced.
    11 Jun 2013, 02:48 PM Reply Like
  • minecanary
    , contributor
    Comments (413) | Send Message
     
    I should have clarified that it's idiotic for normal people - wonderful for the banks and the gov't. I agree w/the paper ETF's falling apart being bullish and to hold physical.It will surge as soon as JPM defaults on settling claims using physical. Beware the gov't though. Take a listen to the Malmgren (Obama advisor) interview on Harveys Organ or KingWorldNews.
    11 Jun 2013, 03:45 PM Reply Like
  • komodov
    , contributor
    Comments (4) | Send Message
     
    Repeat of early '80's? Gold was nearly $900 and went down to around $250 and stayed dormant for years. Seems like the sheeple are willing to spend $1400/oz on something that was so cheap not too long ago. Will it crash or skyrocket? Personally, I don't know. The only honest comment out here.
    11 Jun 2013, 08:25 PM Reply Like
  • solarcircle
    , contributor
    Comments (290) | Send Message
     
    I think the best comment was by minecanary When JPM defaults I think investors will take notice.
    12 Jun 2013, 03:06 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|