"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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GLD Holdings Continue Falling
Here is an updated chart of the reported gold holdings of the large gold ETF, GLD.
Holdings are currently at 776.89 tons, down 3.3 from yesterday's 780.19 reading. The number is now the lowest reported total since December 26, 2008. That is nearly a 65 month low!
This is the reason that gold demand from India and China cannot falter if the metal is to remain above key chart support. Western investment continues to falter as money managers eye better gains in equities.
The steps by the new government in India should eventually help support gold demand there but we will have to watch the short term impact of these falling premiums.
Couldn't some of this be physical redemption of the shares by those holders who are allowed to do so and choose to do so due to the discounted price? By doing this, it also doesn't affect the market price. Just curious on your thoughts. I'm not one of those crazies either that you sarcastically refer to. : ) I appreciate all your great analysis!
ReplyDeleteHi Dan,
ReplyDeleteI'll make a completely amateurish remark here, and probably a bit foolish, but when I watch the chart you posted about GLD holdings, I see two vertical moves upwards looking like a buying frenzy and representing around 700 tons.
Here they are :
http://i60.tinypic.com/2eulkhs.jpg
If those investors were frantic when they bought the metal, maybe they are the same who are frantic to sell it today...I don't know, but I'm trying to hope that in fact around 700 tons of the yellow metal belong to "weak hands" who bought frenetically on the way up and who are now selling in panic mode.
If it's true, probably the remaining "core" position above 700 tons of gold in GLD will probably show more resistance, as they may be in the hands of more careful, long term investors.
Another good news anyhow is that GLD already bled nearly half its 1400 tons. So even if we keep bleeding, GLD cannot go into negative. Worst case scenario is that the West loses all its gold, and GLD drops to zero, Asia owns it all with a big laugh (after all this trend occured a few centuries ago when the West was selling its gold mined in the americas to Asia via Venezia mainly, etc...), and then there is nothing left to sell and no pressure down on prices anymore :)
I'll be quite happy if GLD stocks collapse down to 600 tons and gold prices manage to maintain their hold of 1270 $ :)
Plus geopolitically speaking, the west is starting to lack the ability to plunder countries such as Libya, Ukraine, etc...to replenish their stock and face the unabaded gold demand in Asia. Steve has a better understanding of what's going on there than me, but I guess that gold is cultural there and deeply rooted in the way of life of people (especially India) and I will doubt to see this demand decrease in the future. Maybe I'm wrong.
Two things I'm watching is what Eph warned us about before :
- signs of a sudden drop of Asian demand for gold, following price drop.
- sell of gold of some central banks, including european ones (after all Sarkozy sold 20% of French gold near the Gordon Brown bottom. Bastards. I hope he's enjoying his datcha in Switzerland or whatever they offered him at that time. But France still holds thousands of tons of gold. Italy as well. I'm worried they may undergo some pressure to sell more in the future at the lows. Of course, it's pure speculation. Just to say anything can happen and prices can go anywhere, so let's just follow the price action.
That is one important article. The one part that interests me is the one about bringing stability to the market value of reserves. It does seem, maybe contrary to popular opinion, that a falling gold price is not in the best interests of any central bank. If I owned 10 houses, would I really want to see their value go down? If I owned 25% of the worlds gold, would I really want to see its value go down? Should make for an interesting conversation. Maybe a lot of crosscurrents in that one.
DeleteHubert;
DeleteThanks for all your analysis once again.
Much has been made of where this gold is going that is being sold and that is all well and good but that is really not my point in tracking this ETF. I just use it as a gauge of Western investment demand for the metal.
Those who keep pointing to the drain as if it somehow bullish ( I don't think we have many here at this blog that do ) are missing the point in my view. Asia has been the big buyers of physical gold going back to 2001. That has never been in question in my mind.
What I question, and I think rightfully so, is whether or not Asian demand for gold in and of itself can make up for decreasing Western-based investment demand. Throughout the bull market that last until 2011, the West bought large sums of gold, which combined with Asian demand drove prices to record highs. That Western investment is now dropping which is why the gold price has been going nowhere of late and actually entered a bear market when it broke below $1530.
For gold to resume a strong sustained uptrend in my view, it will require a change of sentiment towards gold from the West, not from the East. This is also the reason I make a big deal of any factor that might cause a slowdown in gold demand from Asia. It is Asia alone that is essentially keeping gold supported right now. If it falters for any reason, it is hard to see gold keeping chart support.
Ukraine is holding the metal higher right now but these geopolitical events are always an "iffy" thing.
thanks again my friend.
Dan
Since 2000, there does appear to have been some kind of long-term relationship between US debt and the gold price and the two have tended to rise together. Sometimes one gets ahead, sometimes the other. In 2010, the gold price started rising at a much faster rate than US debt until, by September 2011, it was way ahead. Then we got the two-year sell-off in gold and the gold price went all the way back to the point at which it had started to surge ahead.
ReplyDeleteMeanwhile, US debt has continued to grow and now debt is way ahead of gold. Eventually, gold will no doubt start to 'catch up' with US debt again. If it does, that would currently mean $500 of gold price appreciation, just to get back in sync.
This current bear market is some 123 weeks old. Of the other major gold bear markets, three have been shorter and two longer. So, in terms of duration – unless this is an enormous bear of 1987-93 magnitude – there shouldn't be too long to go before this one ends.
The average fall has been 45%. So at 36% so far, we have not yet fallen 'enough'. But that average included the steep falls from the exceptional 1980 intraday high of $850, so you could argue that an average closer to 40% could be used.
The scale of the fall relative to the stock market (the gold to S&P ratio) is 'on target' at 60% against an average of 62%.
Based on these comparisons, I think it's fair to say the bear market is mature – the end cannot be too far away.
I guess we will need to wait and see.
If gold demand were that strong as these non-stop gold promoters insist, the WGC would not be reporting falling demand as per the Forex signals.
ReplyDeletethe MSM FOX types as Dan pointed out the other day engaged in sloppy reporting of WGC numbers which showed over all demand from last year as flat. Last years demand was through the roof. So put into context demand in 2014 that matches 2013 huge demand is exceptional...its about putting things into proper perspectivve
DeleteGold action is a major tug-of-war between the pumpers and the bashers;
ReplyDeletewho will win, is the $64K question.
This is the lull season post Chinese New Year and pre-Indian marriage season.
There is selling out of the Western ETFs ; however to make a trade someone is buying? Who are those someone's is the unanswered question.
Dan
ReplyDeleteLooks to me your right again. The sign of the slope of the gold inventory curve is the trend in western gold price.
If we had equivalent data world wide (better than WGC numers) we would have a great tool to estimate price trend.
Looks like gold has seen its glory days for this decade.
ReplyDeleteIts back to a long slumber again until the next speculative PM bubble emerges, maybe another 8 years from now.
Wow, check out NEM getting utterly destroyed today.
GDX/GLD ratio now down to .188
How much does the S&P have on the upside from here? How much lower can the US treasury yields go down?
ReplyDeleteSeems to me that the historical lows in the gold have been seen for generations to come. Perhaps in the not so far away future, we'll need 18% annual interests on morgages to rein the price.
Thanks for that Zhang. Oh, why oh why, have I never taken time to study wisdom coming out of tf site? There's so much you can learn there and it will cost you only your savings and hard earned money. And what's money to pure wisdom I ask you?
ReplyDeleteZhang;
ReplyDeleteI agree - let's just say I am "awestruck" by such profundity.
Seriously, it is tragic that so many pay any attention to these people any more. How much more money do they need to lose and how much more pain must be inflicted upon them before they wise up?
Gold will go up whenever it is ready to go up. Hoping, wishing, praying, pleading, commanding, whatever, is not going to change the market one bit.
Thanks for the great comments.
Copper headed for a third weekly advance, the longest winning streak since February, on improving factory output in China and the U.S., the world’s largest consumers of the metal, amid shrinking stockpiles.
ReplyDeleteBullion Tips
We really don't need your stock tip touts.
DeleteThe liquidation of the GLD is actually very bullish. That means someone wants the physical gold and is taking delivery. Where do you think all of the 700 tons went after it was sold over the last 12 months? Do you think its just a coincidence that the GLD has seen rapid liquidation within a month of when Germany and other countries asked for their gold? I know you guys think this is a conspiracy theory but it makes perfect since to me for the big boys to use the GLD fund as a perfect source to help "suddenly" find supply when they need it!!
ReplyDeleteI guess gold is manipulated!! lol Move along sheeple!!
ReplyDeletehttp://www.foxbusiness.com/industries/2014/05/23/barclays-fined-44-million-over-gold-price-fix/