Wikinvest Wire

One dollar per tonne at the Gold ETF

Wednesday, October 22, 2008

The SPDR Gold Shares ETF (NYSE:Arca:GLD) reached a milestone of sorts today as shown below. For every dollar of the gold price there is now one tonne of gold in the trust.
IMAGEAs might be expected, this has much more to do with the price of gold than with changes to the inventory, at least at first glance.

After the "tonnes in the trust" made new highs over the last month as the price of gold was surging, passing the Bank of Japan as the world's lucky number 7 holder of the yellow metal in the process, there has been precious little selling despite the gold price dropping more than $150 as shown below.
IMAGEThat's kind of odd when you think about it, particularly in light of what's been going on in the stock market lately where stock mutual fund redemptions in retirement plans are being credited with accelerating the decline in equity markets.

For gold, the price goes down, but investors don't sell.

Full Disclosure: Long GLD at time of writing.

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cow said...

One of the things that continues to surprise me about coverage of gold, etc., is that it isn't that gold is dropping, but that the USD has been rising. Mostly, it seems, because people have been hoarding it like crazy.

(I make the distinction because, if you look at, say, gold vs. CAD, it's flat; for a lot of currencies, this is the case.)

Anonymous said...

Hi Tim:

this is off-topic, but I guess it would be good to advertise the stealth-bail-out being engineered in the banking sector: this is some interesting information I found about the Wachovia purchase.

Give it a shot and expose this scam, if you find the time. It's huge and virtually ignored by the MSM.

Anonymous said...

Re: USD strength. Fitting that this is setting up to be the mother of all whipsaws. There are so many companies trading at or less than their cash balances alone. It doesn't take much to see what is overvalued here. Still, doesn't mean it can't continue for a while. Just watch out when the dollar rally comes unstuck.

Anonymous said...

gold in Canadian dollars is an irrelevant measure.
Gold is priced in US dollars around the world, so that is the only measure that matters.

staghounds said...

Trading at their cash balances? Which (non bank) companies?

Anthony J. Alfidi said...

Tim, what are the odds that the U.S. government will confiscate private gold holdings? Forcing State Street to deliver GLD's holdings to Ft. Knox wouldn't be that difficult.

Anonymous said...

@staghounds. Lance Lewis mentioned Nevsun Resources yesterday at Minyanville but there are many others.

Tim said...

Anthony - the odds are certainly much greater than they were a couple month's ago.

On a related note, see: Central Bank gold lending – a market distorter

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