Posted on 23 June 2010. Tags: accumulation, bullish report, Central Banks, ETFs, explosion, gld gold, gld price, Gold, gold etf, gold holdings, Goldman Sachs, history of economics, lbma, nav, NYSE, NYSE: GLD, NYSE: GS, positive feedback loop, risk controls, self fulfilling prophecy, supply curve, Tonnes, virtual certainty
On June 17, we wondered whether the “parabolic blow off in gold accumulation by ETFs is about to cause a gold (NYSE: GLD) price explosion?” Sure enough, yesterday, Goldman Sachs (NYSE: GS) came out with a bullish report on gold in which the firm stated that should gold purchasing by ETFs continue at the recent pace, then gold at $1,400 is a virtual certainty. A quick look at the closing NAV in the gold holdings of GLD, as a proxy of the broader Gold ETF community, indicates that $1,400 – here we come. Just overnight, GLD added another 5.2 tonnes of gold, bringing its new total to a fresh all time high of 1,313.13 tonnes, a whopping 76 tonnes higher than a month ago. As the indexed chart below demonstrates, what we thought could become a positive feedback loop whereby non-physical ETFs scramble to at least catch up to a par NAV, is already in process: the ETF accumulation by GLD, which is now the 6th largest gold-owning entity in the world, has become a self-fulfilling prophecy. If the ETF is indeed purchasing said gold in the open market, there is no way this would not be moving the price much higher, absent massive synthetic shorting by the LBMA. Yet at some point, internal risk controls at even a firm with infinite margin like JPMorgan will take over, and force the bank to cover its record short exposure. When that happens, the already disclosed demand by entities such as ETFs and Central Banks, will catch up with the most manipulated and distorted supply curve in the history of economics.

Posted in The Trade, Trading
Posted on 20 November 2009. Tags: Currency, Gold, IMF, Money, Policy, Reserves, Tonnes, US
The IMF’s International Financial Statistics show the US holding the lion’s share of global gold reserves:
(Source: Zero Hedge)
Wow. The US is holding a huge hedge against fiat currency. This exhibit doesn’t really say much about their faith in people’s faith in paper (or, the Fed’s ability to manage that paper properly).
This chart also says a few more things:
1) At these levels, the world would have to be clinically insane to accept any move where gold represents a global currency;
2) That pile of rock merely pays off a portion of the US Debts;
3) Like paper, gold is just another derivative (i.e., symbol) of reality which does not reflect true value of value added to society; and,
4) Now I’m sure Cash4Gold is a US corporation.
I would also add that if there is a raging river of inflation waiting to break past bank vault dams, gold prices will fly much higher …
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Posted in Damien Hoffman Scoop, Economy, Featured, The Scoop