Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in
In the same category

Raiding the GLD - Gold Crooks and Their Shell Game

IMG Auteur
Published : February 25th, 2013
468 words - Reading time : 1 - 1 minutes
( 3 votes, 5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...




Had to read this several times, and finally used a pencil and paper to mark out all the players and where they moved to.



Friday, February 22, 2013 at 12:26 pm
by Turd Ferguson 

Time to broach this subject again.

Just yesterday, the GLD saw a withdrawal of 8.88 metric tonnes. This followed a drawdown of nearly 23 tonnes on Wednesday. In fact, since the start of 2013, the GLD is now down 59.61 metric tonnes or 4.42% of "inventory". 

Hmmm. Now where has that gold gone?

  • Has it simply been returned to the Authorized Participants' vaults as investors reduce their exposure to precious metals?
  • Have GLD investors liquidated shares and taken delivery?
  • Or, as argued back in November, are the APs using the GLD as a store of gold that they can easily access anytime they struggle to find legitimate physical metal to deliver to clients demanding immediate allocation and delivery?

If the third bullet is true, then GLD drawdowns would be symptom of very strong, global physical demand.

So, for your consideration, let's revisit this issue. First, here's a reprint of the points that Andrew Maguire made initially. The full link can be found here: http://www.tfmetalsreport.com/blog/4327/guest-post-price-suppression-mecanics-gld-and-slv-andrew-maguire

THE PRICE SUPPRESSION MECHANICS OF GLD & SLV

 

The bullion banks finance their ‘physical inventory’ by leasing it or selling it to GLD and SLV shareholders/investors, then the bullion banks in turn use these ETF’s inventories as a ‘flywheel’ to both manage and leverage their physical reserves. For this walk-through, I will use GLD as an example. (One can substitute SLV for all that is described below relating to GLD except the basket sizes are smaller, constituting 50,000 shares).

Baskets of GLD shares are bought and sold through a limited number of Authorised Participants. The authorised participants, (AP’s), are JPMorgan, Merrill Lynch, Morgan Stanley, Newedge (a joint venture between Société Générale and Credit Agricole CIB), RBC, Scotia Mocatta, UBS and Virtu Financial. This is how it is supposed to work. The size of each GLD basket comprises of 100,000 shares, each share representing just less than 1 troy oz. The AP’s, transfer ALLOCATED physical gold to the trustee who in turn creates the required number of new baskets of shares and then transfers these newly created shares back to the AP. To redeem the shares for physical gold or silver, the AP’s transfer any number of the baskets of 100,000 shares back to the trustee who then redeems these shares and transfers allocated gold back to the AP.

This is all well and good on the face of it, but there are a number of ways this ‘allocated’ gold backing the shares in the ETF can be diluted /hypothecated in order for the bullion banks to ‘manage’ their physical reserves.


Read the rest of the article here
Source...TF Metals Report


Companies Mentionned : Bullion | Metals X |
<< Previous article
Rate :Average :5 (3 votes)
>> Next article
All the stuff you don't want to know about, but should. And, when you do know, you realize that for the present you are powerless to change it This article is brought to you by the Charleston Voice E-mail List. To subscribe FREE to the distribution list, send an e-mail to the author with 'SUBSCRIBE' in the subject line.
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Why Are Central Banks Terrified ...
20:33overtheedge
Thank you for explaining this far better than I could. Perhaps a few of the "deflation" religious fanatics will finally recognize there is NO d...
When Even the Fed Is Confused, W...
18:52user4779
Great article! Will you please do a follow-up article on precisely how a fixed ratio can be maintained---the right way and the wrong ways---and per...
Job Site of the Future: Unmanned...
18:46Doom
Exactly! That's why the cotton gin and industrial steel mills closed down immediately and had no effect on the economy. Oh, wait. Nvm.
Marine Le Pen Soars Into Lead in...
30 Januser47791
Some of the polled people must be voting for 2 presidents: the combined votes total at least 134%.
Are You Sure You Want to Delete ...
30 Jan077885258331
are you mad if you save where the government can see it touch it feel it they will take it, either through inflation, taxes or confiscation th...
Greece's Debt: Guess Who Pays in...
28 Janbelville19071
I have read better analysis from Adrian: Greece is in an extremely strong position and the EC has to give in. If Greece leaves and defaults on its ...
Koos Jansen: India's silver expo...
26 JanDoom
Heh, the title doesn't match the subject. I would have been shocked if India was really exporting silver, much less exporting a record.
Education is Too Important Not t...
26 Jansam_site1
Right on Ron. Americans don't understand that we have been fed a distorted version of history taught in our schools. The constant attempts by cri...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Comments closed
Subscribe to 24hGold’s daily market briefing
  • Prices and data of precious metals in 119 currencies and world mining companies
  • Daily analysis of the economy, markets and more
  • Free, daily and indispensable
Stay informed, subscribe now !
* Your email will never be shared.