Wikinvest Wire

Yousa! One thousand tonnes in the trust!

Tuesday, February 17, 2009

Inventory at the SPDR Gold Shares ETF (NYSEArca:GLD) passed the one thousand tonne mark today in what is the most rapid increase since the fund was launched in 2004.
IMAGE Today's 23 tonne increase was the sixth day in a row of additions making for a whopping 229 tonnes added during just the first seven weeks of 2009 - that's almost a quarter of the funds entire holdings.

The annualized rate of the year-to-date additions is a mind-boggling 1,780 tonnes!

For anyone wondering whether lower jewelry demand might impact the price of gold, it appears as though investor demand is picking up all the slack, and then some.

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Full Disclosure: Long GLD at time of writing


Anonymous said...

Is it possible for what happened for oil could apply for gold as well? As such I am not comfortable any longer to see investors bidding up price of anything. Both real estate & oil were bid up by investors while genuine users were backing off. See what happened to both of these two.

Chuck Ponzi said...

Wow, just wow.

Irrational exuberance knows no bounds.

This has bubble written all over it. Better pray the USD crumbles or get out.

Chuck Ponzi

Chuck Ponzi said...

Oh, yeah, Anon,

No, that could never happen to Gold. Gold is different. They're not making any more gold. It will go to infinity and everything else will go to 0.

Invest in Gold and your children will rule the world.


Anonymous said...

Chuck- is there anything that goes up that ISN'T a bubble?
Anon- that's funny you talk about GENUINE USERS for gold - they stopped buying about a year ago - there's a whole new class of genuine users now.

Anonymous said...

Per Jim Sinclair.
It's funny how GLG keeps buying 10s of tonnes daily and there are no records of anyone selling this quantities.

Anonymous said...

I can hardly wait for the headline:

"No real gold backing some gold funds"

Bernie Madoff would be proud. said...

It's just the beginning.

The gold market is tiny compared to other markets like government bonds, or oil, or equities.

The gold market is so tiny you can barely see it on the horizon.

Who cares that GLD is now worth nearly 32 billion. That doesn't even register.

The whole "bubble" meme just won't quit.

Anonymous said...

I was hoping I could get some perspective. How much of the total world gold reserves does GLD hold? It would seem that if it goes past a certain percentage, and things get much worse, the chances of siezure by one country or another are real risks...

Chuck Ponzi said...

George P.

Good question. Nowadays, with so much money chasing so few good investments, most everything that goes up is in a bubble.

But, more importantly, the fundamentals of gold is the cost of production plus a reasonable profit. I doubt anyone would agree that 100% or more is a reasonable profit. The longer a bubble goes on, the more production comes online, which eventually triggers a crash.

It was true of dot-com stock, it was true of housing, and it was true of oil. Would anyone venture a guess that it's different this time? I would hope that we're all smarter than that after the last ten years.

Don't get me wrong... gold is more valuable than it was 10 years ago. But, is it worth 4 times as much? In my opinion, no, but everyone is entitled to theirs.


Anonymous said...

Wheres the bubble?

Today gold hit a new high in £UK.
Why? Because its in a bubble?
Because the UK gov are hellbent on 'Quantitative Easing' - printing money.

AFAIK the value of Gold doesnt change; the price fluctuates.
As the £UK continues to sink it seems to me a sensible option to hold gold. (if in UK)

The DOW currently costs about 8 ounces of Gold.
Its still nowhere near its 1980s highs in real terms (when it hit about 1 ounce/Dow). Wheres the bubble?

A dollar in 1980 would buy you the equivalent of $2.90-$4.95 today (2007 figures used).
Thus, if gold were even half way toward its bubble high it would be priced between $1000 and $2000 per ounce. Or put another way, to be half ways to its highs the DOw would need to be at half its 2007 levels (about 6000 or another ~20% drop).

Wheres the bubble?
Its in your stock valuations, yankees.
(Seriously, how the hell do you bail out banks, shred your motor industry, pump taxpayers money into anything that moves, all the while imagining your stock markets are fairly valued, then turn around and say that its Gold thats overvalued?

Looked at in this way what youre actually saying is that the DOW is going to rally hugely and suddenly? On what basis?

Either that or both Gold and the Dow are going to tank?

Which is it?

(the above calculations are very rough - its late here in the uk :) )

Anonymous said...

I think some people here should be reading this post carefully:

What if GLD is another Madoff type scam?


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