July 13, 2008
– Comments (12) |
RELATED TICKERS: GLD
Data source from the ETF's website... total tons of gold in holdings is second to last column:
WOW! That is an impressively large addition.
Gold is going to be hot, but this time around I see silver as the bigger winner. Great chart. after the sell off in oil, some money moved to gold, to hedge against sell offs in crude. I see the two as kind of attracting the same capital, from the same people at different times, but both always in the larger picture are moving in sync, that is up.
Anyone care to comment on the implications of this chart? I can't quite make the connection between this fund increasing it's gold holdings and evidence that investment capital is flowing into gold.
My understanding is that a share of GLD or similar other trusts represents a portion of bullion sitting quietly in an insured vault somewhere. However, under what circumstances does the ETF increase it's holdings and issue more shares?
Without taking the time to pour through GLD's particular prospectus, I can tell you from my recollection with IAU's prospectus that the ETFs purchase baskets of bullion as needed to reflect the number of shares held. Don't think of the vaults as dark, quiet places, but rather as very busy secured spaces with lots of bullion movement in and out... these days just in. :)
The implication of this chart is a major surge in investor interest in gold. If you want to delve into the specifics of the GLD prospectus and report back to us, I would love it, but I venture to say it will look very similar to the IAU ETF's process.
Chris....Thanks for the post....I am not surprised. I still think there is a MINOR ( I simply cant see any big jerks from here) correction due. What really bothers me - I do not think there is time to wait.
As things have really become murky - I think gold and silver are good sitdown places now - it may loose some value ( especially if investment is thru producers and not the physical) - yet may well be better than the indices.
I want to Dollar Cost Average - what's the best way. I do DCA today in a lot of my mutuals - spread all over the month ( I think I have at least one transaction every week). This is the reason I like T Rowe Price - their min is $50. New Era - which is a good natural resource fund is a core holding I have.
Anyway - I intend to move 2 main transactions into CEF and AEM. I was eyeing AUY - but I think waiting for their earning ( due in a few weeks) is better. This would be about 30% of where I want to reach. From there I want to inch in - obviously need to eliminate commissions
Does anybody know a way to do this?
I'm no expert on the DCA topic through brokers, though my suspicion is that commission-free DCA is usually offered just for mutual funds or in some cases for equities directly between investors and the company in question. I have never researched this, though, so I can't really be of much help.
The implication of this chart is a major surge in investor interest in gold.
While I agree that in the big picture, investor interest in gold is increasing (as it should be) I'm still struggling to understand the nature of this connection that you have made with the bump in GLD's reserves this week. When the GLD fund purchases a big load of gold for their vaults by contract or at spot price, this transaction neither increases nor decreases the total amount of gold on the market, it merely changes the vehicle for ownership of the metal.
Therefore, when GLD increases it's holding of gold (ceteris paribus), then that would merely indicate that the level of investor interest in the metal is the same, but the preferred vehicle for ownership has moved in favor of the fund.
It seems to me that the spot price, which has also been rocketting in the last few days, should be the real measure for investor interest in gold.
Not true, my friend. GLD holdings are a viable indicator of investor demand. I encourage you to continue researching this topic. Consider the proportion of total bullion holdings by investors worldwide to the amount of gold in among the ETFs... the ETFs have become the most common vehicle for bullion ownership, so they are the best indicator we have. A far better indicator than spot price, which can be, and is, manipulated by powerful players.
"We believe that the moves in ETF holdings is evidence that investors have become much more worried about systemic risk and that, once worried, investors will remain concerned until there is clear evidence that the situation is getting better."
Do you think the dow will double in your lifetime or will the price of gold will double?