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Gold ETF inventory increases by 37 tonnes
Wednesday, September 17, 2008
The SPDR Gold Shares ETF (NYSE:GLD) inventory increased by 36.5 tonnes today, an event that was probably related to the $85 increase in the price of the metal. This was the second biggest one-day addition, behind only the July 11th purchase a few months back.
Prior to today's addition, there had been a 92 tonne net decrease in inventory since that July 11th increase, with gold exiting the trust as recently as last Tuesday (11 tonnes) and Wednesday (16 tonnes).
As is the case for stock funds, when there is more demand for shares than currently exist, the fund must create new shares. As part of the process, instead of going out and buying stock to be placed in the fund, gold bullion is purchased and placed in the trust.
Sometimes it's funny to think that the gold and silver ETFs are being hailed as innovations here in the 2000s, just as stock mutual funds were lauded in the 1980s and 1990s .
That's real progress.
2 comments:
Tim, Could you comment on any of the various risks associated with holding GLD or other ETF's instead of physical gold? So far most of the criticism seems to come from it's competitors (goldmoney) and gold bugs. Is it significantly less safe than holding one's gold though other methods (safe in the basement at home, bank vault, Perth mint, etc) ?
It's so convenient compared to the alternatives. In the long term you might have a confiscation risk, but short term I prefer it.
I like GLD and I also like GoldMoney, but as far as convenience is concerned, there's no comparison. By far, however, the best way to own gold is physical metal stored in a safe place - long-term your storage costs will be much lower and you'll always be able to put your hands on it. I would expect to see a growing premium for coins as well - the coin shop I've dealt with for years used to pay $13 over spot, now they pay about $25 over spot.
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