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Message: Another Record High at Gold ETF
The latest data indicates that increased demand has vaulted the Gold ETF into record territory. Always a good sign to start the year off.
Interesting observation that very little if any reduction in the Gold ETF was made during the Fall period when markets plunged and funds were supposedly selling off their holdings indiscriminately to meet demands elsewhere. Seemingly they sold off their PM shares but not their Gold ETF shares. Considering the ETF's were specifically designed to attract gold demand of funds, one would have tended to think that the Gold ETF's would have suffered much more than PM shares. But they did not? Therefore, either the funds were not selling everything indiscriminately or there is some other cause for PM share weakness. I am sure most of us know the true answer, especially after witnessing another day of a relentless trading pattern.
Just a few thoughts - VHF
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A New High At The Gold ETF
Tim Iacono
Thursday, January 08, 2009
Inventory at the SPDR Gold Shares ETF (NYSEArca:GLD) made a new high on Tuesday at a whopping 787.88 tonnes after two small additions over the last week or so. This amount of bullion is greater than all but five of the world's central banks and the IMF.
Traders and investors of all types continue to like the yellow metal as the financial crisis goes on and on, now in its 18th month.
It seems clear that the longer these "paper money" troubles persist, the more popular nature's money will become, a falling gold price (per the futures market) since the high of last spring failing to deter buyers.
The two most recent additions are shown in the far right of the chart below. It's been slow and steady since the fall when inventory rose and the price fell. The Gold ETF has been a pretty good proxy for physical demand as the inventory/price relationship seems to track demand in the coin dealer market.
Since late-October, there have been ten additions, averaging about four tonnes each, and only two reductions of 0.2 and 0.3 tonnes. (Why did they even bother?)
This pales in comparison to the September-October period when there were 13 additions, averaging 13 tonnes each, along with 11 reductions averaging 7 tonnes.
A few months ago, the inventory-to-price ratio exceeded the one-to-one mark (i.e., tonnes in the trust per dollar of the gold price) as shown below. This ratio has recently dipped back below that mark but is headed higher again.
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