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Outflows from gold ETPs have hit a record 159 metric tons so far this month, bringing YTD...

Outflows from gold ETPs have hit a record 159 metric tons so far this month, bringing YTD outflows to 319mt or 12% of holdings at the year's start. As comparison, gold inflows for all of 2012 were 279mt. The largest of gold ETFs, State Street's (STT) SPDR Gold Trust (GLD) has seen outflows of 11% this month to 1,083mt.
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Comments (21)
  • Castrese Tipaldi
    , contributor
    Comments (46) | Send Message
     
    What a serious tone.....

     

    You almost look like you're talking real gold....
    29 Apr 2013, 03:43 PM Reply Like
  • JRF77
    , contributor
    Comments (102) | Send Message
     
    At 32,150.75 troy ounces to a metric tonne, this means that gold funds have seen an outflow of 10.26 million ounces of gold. Does anyone know what proportion that is of the global supply? And does anyone have a good guess as to who has bought the 10.26 million ounces? At today's spot price (1469.40) that's just over $15 billion.
    29 Apr 2013, 03:44 PM Reply Like
  • mstrong1
    , contributor
    Comments (88) | Send Message
     
    "Let's Get PHYSICAL"
    29 Apr 2013, 03:46 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (3220) | Send Message
     
    Challenging question:

     

    If the gold that these various ETFs owned actually had to sell the gold in a declining market, who is buying it?

     

    The only one's who can buy that amount of gold are either Central Banks or some large hedge funds.

     

    South Korea purchased 20 metric tons in February
    Russia 19.2 metric tons
    Kazakhstan 6.6 metric tons
    Indonesia 1.9 metric tons
    Bosnia and Herzegovina 1 metric ton
    Azerbaijan bought 2 metric tons
    Turkey bought 33.1 tons
    China has bought 75 or so metric tons this year, not to the Central Bank of late from what I have read, but to citizens. http://onforb.es/ZgyRq0

     

    This total comes to 158.8 metric tons bought out of 319 metric tons sold by the ETFs, leaving 160.2 metric tons being bought by someone else.

     

    Maybe there are more Central Banks buying up the gold being discarded by the ETFs, assuming that's actually occurring or they had the gold to begin with.

     

    Just throwing this information out there for discussion.

     

    While Central Banks are doing some buying, and there may be some hedge funds buying, 159 metric tons.
    29 Apr 2013, 03:55 PM Reply Like
  • 9532921
    , contributor
    Comments (195) | Send Message
     
    Oh, pick me, pick me!! I know the answer!! Pick me!

     

    The buyers are those with deep pockets: Market makers, arbitragers, risk-takers, etc.

     

    They are buying GLD at a discount vs. spot. They then redeem these shares for physical gold at the spot price (this is your outflow). Finally, to capture the spread and close the trade, they either sell the physical on the COMEX or hedge the physical position by buying gold in a market that prices closer to spot, e.g., CME.

     

    You're welcome.
    29 Apr 2013, 04:24 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (3220) | Send Message
     
    Fair enough, but a few points if I may...

     

    What do you mean they are buying GLD at a discount vs. spot? Who is "they?" Your flow of English goes from the paragraph talking about Market Makers etc. to the next paragraph pertaining to "they are buying GLD." I wasn't asking about the buying of GLD, but the selling. The sellers are the custodians.

     

    I understand your deep pocket comment, but that's a lot of "physical" gold to speculate with on the short term. You say they redeem these shares at the spot price, thus they lock in a loss to spot because GLD "sells" for a discount to spot with the fees associated with it. Then when the custodian goes to sell the gold that backed the shares, they will get what the market bears at that moment, assuming there is a buyer.

     

    Your descriptions of buyers might be accurate, but the deep pockets they possess for buying physical is not the game they usually play. They are much better with the paper game.
    29 Apr 2013, 04:50 PM Reply Like
  • Lew Warden
    , contributor
    Comments (3) | Send Message
     
    I'm not a speculator but when my wife and I were cruising in Mexico, we berthed next to a real market hustler. He told us that when the price of platinum was near the price of gold, we should buy. It was, so we bought an equal amount of both. The years went by. Platinum went up because of a new found use in auto exhaust systems. Gold just lay there. So we decided we shouldn't mess around in other folk's business and sold the platinum, recovering our total investment. We still have the gold, watching it go up and down and trying to fathom why. Your explanation satisfies us that the pros know their business, and confirms that we don't. A nice tidy explanation. Don't know if it true or not. But interesting..
    29 Apr 2013, 05:41 PM Reply Like
  • 9532921
    , contributor
    Comments (195) | Send Message
     
    Doug,

     

    You have it all messed up.

     

    The deep pocket players are the buyers of GLD. The sellers of GLD are retail, hedge funds, speculators willing to bet on paper, etc.

     

    The highest volume deep pocket players (market makers, arbitragers) don't need deep pocket's for risk taking (short term risk is within the definition of market maker and arbitrager, fyi). They need deep pockets for efficiency. By efficiency I mean the fastest computers, connections, data, etc. possible. Turnover is a very expensive game to be a winner in and you therefore need deep pockets.

     

    Again, you have it all messed up. Market maker/arbitrager buys GLD at a discount to spot. They then redeem their long contracts for physical gold. Finally they go sell gold at the spot price in the physical market, or they buy a hedging instrument that is more closely priced to spot than is GLD, e.g., gold futures.

     

    Let me know if you need more clarity. It's all public information. You should read about ETF creation/redemption.
    30 Apr 2013, 09:49 AM Reply Like
  • 9532921
    , contributor
    Comments (195) | Send Message
     
    See Lucas Krupinksi's comment, found below. He is much more eloquent than I and is on point.
    30 Apr 2013, 09:52 AM Reply Like
  • ddearborn
    , contributor
    Comments (141) | Send Message
     
    Hmmm

     

    Clearly we all know why people are selling: price is down and there is no way anyone will ever get physical delivery. So everyone is off loading. I think what these numbers tell us is that there never was any actual physical gold backing the paper.

     

    If however there was as pointed out already only very large players gold purchase this so that is the million dollar question that the pundits don't ever answer (that would give it away now wouldn't it)

     

    Either way it tells us the system is all jammed up. And if all that paper out there is backed up by thin air then who ever ends up owning the mines will end controlling the worlds currencies........

     

    Could this be why there have been so many "mergers" and suspect "bankruptcies" of miners of late?.......In the end the same crooks that screwed the rest of us in the first place will be the ones that some how some way managed to end up with all the gold. B e it above ground or still in the ground.
    29 Apr 2013, 04:02 PM Reply Like
  • Lucas Krupinski
    , contributor
    Comments (593) | Send Message
     
    IAU and GLD aren't convertable to physical gold by you or I, just as shares of SPY and QQQ aren't convertable to their underlying components by you and I. But they are convertable, by the basket (of either 50,000 or 100,000 shares) by the markets "authorized participants". And if the disconnect between paper and physical is as big as some commenters seem to say it is, then the authorized participants are doing exactly what is envisioned they should be doing - arbitraging the difference - converting their baskets back to the underlying and selling the underlying directly. They wouldn't be doing that if there wasn't gold to take possession of.

     

    And i don't know about the rest of you guys, but I tend to think that John Paulson is a pretty smart guy. True, it was just his his bet about subprime that put him in the spot light, but that means he does his homework. I don't think for a second that he'd have bought up as much of GLD as he has if there was a chance that those shares weren't backed by the physical commodity. No, he'd be shorting it. I'm sure his research and due diligence team is a lot more competent than so many conspiracy theorists are. He showed his that he's got the guts to bet against the big boys (of which, yes, he is one of them, but he still bet against hte crowd) in his subprime bets, so you can't attribute his ownership stake as being a move just to help mask an illusion.

     

    The gold is right where its supposed to be, in vaults. And the outflows you're seeing are authorized participants fulfilling the roll that is designated for them - arbitraging away the difference in prices.
    30 Apr 2013, 08:38 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (10013) | Send Message
     
    For every seller there is a buyer...
    29 Apr 2013, 04:24 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (3220) | Send Message
     
    Right...just trying to figure out who has the deep pockets to do so. Meaning...the actual physical.
    29 Apr 2013, 04:51 PM Reply Like
  • Jason Burack
    , contributor
    Comments (1834) | Send Message
     
    Smart money does not trust the Gold ETFs and has started withdrawing physical gold from there too. Allocated gold accounts at banks are not safe either.
    29 Apr 2013, 04:52 PM Reply Like
  • eagle1003
    , contributor
    Comments (1707) | Send Message
     
    The buyer of last resort is always the gold ETF sponsor, who will buy up units and cancel them at a price they deem to be appropriate when there are no buyers willing to bid a better price. When units are repurchased by the sponsor and canceled, no real gold exchanges hands.

     

    Those who think that the ETF sponsors run out and buy real gold to fulfill the demand by the ETFs, are badly mistaken. That's not how it works. It's all done electronically with the holders of physical gold (banks) leasing out their gold on a leveraged basis. Some believe that the same gold is leased to multiple clients. We have no way of knowing if that is true because the banks are not required to report their actions. There appears to be zero over-sight by regulators. Note that 'leasing' is NOT a transfer of ownership!

     

    It seems that the connection between paper gold and the real thing is, at best, tenuous. Some may feel that corrupt would be a better word. Just think about how easy it would be for interested parties to manipulate the price of real gold by buying or shorting the gold ETF's and doing so without ever having to worry about having the real gold to back them up!

     

    The bottom line here is that despite the huge reported outflows of gold from the ETFs, the amount of gold that has actually changed ownership may be substantially less than what the 'outflow' would indicate.

     

    Here a couple of links for those who want to follow up on gold leasing:
    http://bit.ly/ZZApDM

     

    http://bit.ly/14JMTHX
    29 Apr 2013, 05:33 PM Reply Like
  • ziggysdad
    , contributor
    Comments (42) | Send Message
     
    It's all a bunch of the big banks shorting then buying back, very short term, they play the ETF people for suckers. I own real Gold and Sliver purchased over many years. I think I've won!
    29 Apr 2013, 07:03 PM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    If the price of the paper gold - the ETF - drops, the price of real gold remains unchanged. This is common knowledge. The two do not track each other at all. So of course you have won. The ETF can go to 0, the price of physical gold will shoot to the moon.

     

    So get physical.
    30 Apr 2013, 12:53 AM Reply Like
  • Stephen Delear
    , contributor
    Comments (31) | Send Message
     
    Some central bank somewhere is propping up the gold price so that the hedge funds that bet on gold can get out before the price collapses.
    30 Apr 2013, 02:47 AM Reply Like
  • Brian Bobbitt
    , contributor
    Comments (2062) | Send Message
     
    When one has been around the gold market as long as I have, you will see a hunnert or two tons of gold ain't much bullion. The trades in bullion are almost as epic as currency trading. All foreign trade is done in US$ and that is gold also. You can give me US$'s for my corn, or put my name tag on your gold for a while until I buy something from you, then you can put your tag on it again. With the COMEX and ETF gold trades, don't give it a thought. Trading is always done in numbers that numb us little folks. Just go with the trend and if we are in an up or down trend, use it for profits. If you long term peace of mind is more important than short term anxiety, then buy gold. I again, say, If I put an ounce of gold in one hand, and anything else in the other, which would you choose to pocket and would you have a grin and warm feeling? I have ALWAYS chosen the gold for long term, and never regretted an ounce whether I paid 2000 an ounce, or 42 for silver, I am not unhappy.
    Go for the gold, silver anniversaries and platinum jewelry is desirable for a reason.
    Capt. Brian
    The Lost Navigator
    30 Apr 2013, 03:35 AM Reply Like
  • kmi
    , contributor
    Comments (4527) | Send Message
     
    You 'long term peace of mind' guys need to close your 10 year charts and start looking at longer timeframes.

     

    It's pretty appalling that people are trying to sell that, because the folks who buy it tend to be the folks who can least afford it.

     

    It's almost as disingenuous as the folks who pretend 'physical' and 'paper' markets are unrelated and uncorrelated.
    30 Apr 2013, 07:49 AM Reply Like
  • RS055
    , contributor
    Comments (3862) | Send Message
     
    The 'Spot Price" AKA " London Gold Fix" is set twice a day by the following 5 banks: Scotia-Mocatta , Barclays Capital,Deutsche Bank HSBC Société Générale. Kind of like the LIBOR fix!!
    The Futures price is set by traders on the COMEX.
    The actual physical price is, as far as I know, not officially published - but has recently been significantly higher (anecdotally) than the "Spot Price" in various markets.
    The GLD price tracks the Futures price. I have to believe the London Fix also tracks the futures price.
    The recent large withdrawals of physical metal from GLD occur by the large banks delivering GLD shares to the ETF and getting physical in return - which they presumably can deliver on the futures markets. It would seem, there was a lot of demand for physical delivery on the futures markets. Makes sense.
    30 Apr 2013, 06:42 AM Reply Like
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