GLD Drain Continues In 2015

by Turd Ferguson, TFMetals Report

Though gold was only down a little more than 1% in 2014, the drain of the GLD, which began in 2013, continued in earnest.

We’ve been documenting the drain of the GLD “inventory” for over two years. There have been a number of posts written, a few examples are listed here:

http://www.tfmetalsreport.com/blog/4633/enencumbered-gold

http://www.tfmetalsreport.com/blog/4684/bear-market-gold

http://www.tfmetalsreport.com/blog/5167/pillaging-gld

http://www.tfmetalsreport.com/blog/5505/gld-two-step

Well, the pillaging and plundering continued in 2014, even if not at the same furious pace seen in 2013. As mentioned above, after the raid of New Year’s Eve, gold actually posted a slightly negative return for 2014, down 1.4%. However, global physical demand continued unabated with China leading the way at nearly 2,100 metric tonnes: https://www.bullionstar.com/blog/koos-jansen/yearly-shanghai-silver-volume-transcends-comex-again-sge-withdrawals-nearly-2100t/

So it should come as no surprise that the alleged “inventory” of the GLD fell by another significant percentage in 2014. After having begun the year with an “inventory” of 798.22 metric tonnes, the GLD wrapped 2014 with an “inventory” of just 710.81 metric tonnes. This is a decline of 87.41 mts or 10.95%. Though not as dramatic as the 551.70 metric ton (40.87%) decline of 2013, this is a significant plundering, nonetheless.

Just how much is 87.41 metric tonnes?

It’s 2,810,296 troy ounces. Stated another way…it’s 2,810,296 of these:

If you had added these to your personal stack in 2014, your stack would now be about 11,000 feet high. You’d better alert your local aviation authorities if this is the case!

Looked at in a more traditional fashion, recall that a traditional London Good Delivery bar is approximately 400 troy ounces. This means that 2,810,296 ounces of gold equates to about 7,026 of these:

If we stacked all of our bars onto pallets, holding 192 bars each, it would look like this:

However, for the total 87.41 metric ton withdrawal, we would need about 37 pallets:

In the end, what matters is where all of this gold went. So, where did it go?

First, it went to Switzerland, where it was re-assayed and then re-cast into 87,410 of these:

Then shipped off to points East and gone for good: http://www.tfmetalsreport.com/blog/3924/gonefor-good

Is it any wonder why the CME Group is so excited to unveil their new, Hong Kong based, kilobar contract? (http://cmegroup.mediaroom.com/index.php?s=43&item=3585) There are scarcely any London Good Delivery bars left!

The Old Order is passing away. The paper–physical connection is finally breaking and the new markets for pricing precious metal will be based upon physically delivered contracts, located in Asia. Expect unprecedented volatility as this transition continues and, if you have to ask yourself whether or not you hold enough physical precious metal yourself, then you likely don’t.

2015 is going to be a wild and eventful year. Continue to prepare accordingly.

TF

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