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LAWRIE WILLIAMS: GLD bleeds 71.58 tonnes of gold in just over a month

The SPDR Gold Shares ETF (GLD) – the world’s largest gold ETF – saw another 5.03 tonne withdrawal yesterday bringing the total of gold held to only 795.42 tonnes – its lowest level since mid-March 2016 and fully 71.58 tonnes below its recent interim peak of 867 tonnes seen as recently as mid-June - and 58.26 tonnes in the past month.  This is a huge fall in such a short period and last time the GLD holding was as low was back in mid-March last year.

The big anomaly here is that similar big withdrawals from GLD are normally accompanied by a fall in the gold price, but in the event gold surged yesterday to over $1,260 an ounce – its highest level since mid-June.  Indeed gold has effectively been on the rise for the past three weeks – a period over which GLD has bled close on 40 tonnes.

There have been various attempts to understand this unusual pattern.  Ed Steer in his daily newsletter, quoting Ted Butler who follows movements in the silver and gold markets very closely, picks up the following quote from Ted "The most plausible and, in fact, only explanation I can come up with is that some large entity is converting shares into physical metal for the purpose of preventing share ownership from rising to or above reporting levels. When a big shareholder converts shares of SLV or GLD into metal, the shares no longer exist and, therefore, don't need to be reported to any regulator. Likewise, direct physical ownership of silver or gold needn't be reported to anyone no matter how large the position may grow. (This is another major factor behind why JPMorgan decided to buy physical silver). Again, a large entity amassing a large physical position in silver or gold on the sly is not bearish for price."

Whatever the explanation the movement of gold out of GLD at a time of a rising gold prices, if it continues, has to be very worrying for gold bulls.  My colleague Julian Phillips writing on my site – www.lawrieongold.com – is, however, confident that the GLD gold withdrawals will shortly turn around and we will additions back into the world’s largest gold ETF.  It is noticeable that it is appears only to be GLD which has been so affected.  The other big U.S. Gold ETF – the iShares Gold Trust (IAU) does not appear to be seeing similar movements and, by all accounts, the European gold ETFs, if anything, have been seeing inflows rather than outflows.

27 Jul 2017

About the author

Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London – recently described as the World’s No. 2 University (after MIT).

e: lawrie.williams@sharpspixley.com

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