3 Important Gold Charts - Transparent Holdings
Fall As Bullion Goes East To Russia and China
Chart 1: Changes in Holdings (millions of oz) vs Gold Price
Nick Laird of www.ShareLynx.com has compiled some
great new charts on the transparency of public gold holdings over time. The
charts were emailed to us Monday night. Sharelynx.com is one of the
internet’s most comprehensive sources for market related charts and is well
worth the subscription. The charts are very illuminating and provide great
insight into how gold has shifted between non public sources and public
sources over the last 10-12 years. Below we reproduce some of Nick’s charts
and some GoldCore commentary on the trends that we find most interesting.
In his charts, Nick has defined transparent gold holdings
as “Total Published Repositories, Mutual Funds and ETFs”, and the gold
holdings in millions of ounces are derived from these sources. The data
therefore covers known private holdings of gold but excludes both the
holdings of central banks, the official sector, and holdings in private
ownership including for example GoldCore Secure Storage holdings.
The first chart shows a long term view of transparent
gold holdings since 1970. As the gold bull market began in the late 1990s,
the amount of gold held in transparent holdings rose sharply and displays a
very high correlation with the rising gold price.
Chart 2: Total Ounces by Source 2004-2014
While there would obviously be some data issues in
collecting gold holdings data from periods such as the 1970s and 1980s, more
importantly, there was a very limited choice of accessible gold vehicles and
the futures markets were in their infancy. It was only since the early 2000s
that the choice of gold vehicles, and therefore high quality holdings
information, became available.
Beginning in 2001, when only a few millions ounces of
private gold holdings could be tracked through publically available sources,
the amount of gold held in public repositories exploded as the gold price
rose, reaching 20 million ounces in 2006, 50 million ounces by 2009, and over
100 million ounces by the beginning of 2013.
Interestingly, as the gold price peaked in 2011, the
amount of gold flowing into ETFs, mutual funds and other public repositories
kept increasing and only peaked In January 2013 as the gold price began its
fall from $1,700/oz through to $1,300/oz.
Chart 2 shows a ten year view from 2004 to 2014 and
drills down into the sources that make up the transparent gold holdings
totals.
These sources include everything from COMEX and the GLD
ETF to the iShares ETF and the Central Fund of Canada, and also publically
available data on some of the smaller ETFs and online gold retailers.
While the holdings represented by the futures exchange
did grow over the 2000s, their growth was quite stable. By far the largest
growth in trackable gold holdings was in the GLD and the other large ETFs
such as the ETF Securities and iShares products.
Gold holdings in GLD grew consistently from 2005 to 2009,
but then rocketed up from 2009 to 2011 before stabilising until the end of
2013. As has been documented elsewhere, there was then a huge outflow from
GLD. The trend in the other ETFs is similar although on a smaller
scale.
Chart 3: Total Weight (millions of oz) vs Total Value
Chart 3 compares total weight of gold held to total value
in US dollars of those holdings. The key takeaway from this chart is that,
again, as the price of gold rose, there was a huge mobilisation of gold out
of non publicly tracked sources into vehicles and on to exchanges where it
could be publically tracked. This mobilisation of gold at its peak was
somewhere between 90 million and 100 million ounces (2800 tonnes - 3100
tonnes).
The question is where did all this gold come from? Some
would obviously have been from new mine supply, some probably from
central bank sales, and some from dis-hoarding out of private hoards.
Although HNW investors were more likely to have been buying gold in the years
immediately preceding the global financial crisis and almost certainly were buying
during the financial crisis.
An equally important question is that now that the public
repositories have lost 30 million ounces in under 2 years, where has all that
gold gone?
It would be realistic to assume that some has gone to
China and the Far East since there has been evidence of such flows. Equally
its possible that some of the gold that has disappeared from the ETFs and
other products and sources has again gone back into private hoards or else is
being accumulated by the official sector such as emerging market central
banks such as the Russian central bank and the People’s Bank of China (PBOC).
We discussed this, ‘peak gold’, Russian gold buying and
producing and Russia and China's plans for gold in a short interview at the
weekend:
View here
MARKET UPDATE
Today’s AM fix was USD 1,277.75, EUR 974.42 and GBP 773.27 per ounce.
Yesterday’s AM fix was USD 1,287.25, EUR 979.34 and GBP 774.47 per ounce.
Yesterday’s PM fix was USD 1,286.50, EUR 979.44 and GBP 773.84 per ounce.
The US markets were closed for a national holiday
yesterday.
Gold in Singapore fell by $10 in
illiquid trading prior to further falls in London which saw gold fall to
$1,270/oz. Silver slipped $0.30 or 1.55% to $19.17 per ounce in London
trading.
Platinum is down 0.35% to $1,420 after falling from
$1,426. Palladium failed to hold above the key $900 level and fell 2% today
to $890 from $909 yesterday.
Despite ongoing significant geopolitical tensions in
Ukraine and elsewhere, gold has not managed to break above $1,300/oz. It
continues to trade at the lower end of a tight trading range between
$1,270/oz and $1,300/oz. Silver, likewise, has followed gold lower.
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