Wednesday, March 11, 2009
Yes, I know. In some parts of the internet, they're going on and on about how the gold in the SPDR Gold Shares ETF (NYSEArca:GLD) might not really be there or how it's being double counted or how they're getting gold plated lead bars from China or some such.
To me, it's just fun to watch their stash grow as inventory at the world's most popular gold ETF passes holdings by central banks all around the world. Switzerland, you're next!
Soon, GLD will be number six in the world and then it'll be a long way to go in relative termst to catch Italy at almost two and a half tonnes but, at the rate they're going in 2009, that'll happen by this fall. Then it's just a chip-shot away to surpass France.
With net assets of over $33 billion, GLD is already the second largest ETF in net assets according to Yahoo! Finance behind only it's SPDR brother SPY at about double that figure. Somehow, it seems like that gap might narrow rather quickly over the next year or so.
When looking at the change in inventory at GLD and the price of gold, it makes good sense what is happening. Due to global economic slowdown and higher prices since the first of the year, the jewelry business has, for all practical purposes shut down, so investment buying is about all there is these days.
As shown below, once they stopped adding tonnes to the trust, the gold price began to fall.
Today's 9.6 tonne addition was the first substantive change since February 19th which, not coincidentally, is when the gold price began to tumble.
There doesn't appear to be any mystery here...