Have a post up on the corporate blog How ETFs Haven't Altered The Dynamics Of Gold where I have a go at the mainstream finanical narrative that gold ETFs were a “game changer for the gold industry”, making it easier for investors to buy gold and having a positive impact on the gold price. If you properly classify bar/coin and jewellery bought for investment reasons then that accounts for over 11,400 tonnes of physical gold compared to only 2,600 tonnes of ETF investment between 2004 and 2012. More at the link.
Still snowed under with work so fustrated at limited blogging capacity. Just one quick FYI from a contact Ronan on a soon to be launched gold ETF from Axel Merk:
This Trust seems to follow the standard format, a trust backed by allocated physical 400oz bars. JP Morgan will be custodian. The differentiating factor in this trust will be that it holds other types of gold in addition to 400oz bars, such as smaller bars and even coins, and small investors will be able (if they want) to redeem shares for gold bullion, which is a new angle.
There is a web site which seems to be on hold www.merkgold.com until after the IPO. See link for one of the filings.
I'm surprised anyone would think more gold ETFs are needed, but maybe they think the redeemability in small sizes will be attractive. I would note that redeemability at any size into any coin or bar was a feature of Perth Mint's ASX listed gold product PMGOLD when launched in 2003. Ten years later they are catching up. The holding of smaller bars will just add to costs, but as they don't have a Mint out the back, I suppose there is no other way for them to offer than redeemability.
Merk has some good articles on gold here, quote: "I am an optimist. I’m no conspiracist. I just happen to think the road to hell is paved with good intentions. As a result, I own gold".
Merk has some good articles on gold here, quote: "I am an optimist. I’m no conspiracist. I just happen to think the road to hell is paved with good intentions. As a result, I own gold".
FYI, you may also find this paper by CME Group having a go at gold ETFs versus Comex futures of interest/amusement, quote:
"While there is a place for ETFs in any investment portfolio, there are several drawbacks that do not make them the first choice for individuals wishing to invest in gold.
When the goal is to simply benefit from a rise or fall of the price of gold, COMEX Gold futures are the logical choice. COMEX Gold futures offer the investor a fast and accurate pricing mechanism, the ability to leverage their trading strategies and the security of doing business on an exchange that has guaranteed the performance of each of its transactions for over 100 years."
I want to thank you Bron for your measured and rational discussion of the precious metals markets. You are like a beacon of light amid the murky seas of ignorance and confusion. Please continue your fine work and do not be discouraged by lesser mortals who accuse you of bias and duplicity.
ReplyDeleteBron -
ReplyDeleteit looks like that Merk product will not hold other types gold (it will hold London bars), but will acquire them for certain redemptions...
aside, the APMEX product is still in the filing stages with the SEC... the most recent filing is from mid Feb
Bron - I'm not sure about this (sorry I was unable to leave a comment on the actual post) ETFs not being that important.
ReplyDeleteYou shouldn't compare the change in ETFs/change in bars & coins with the price, but the change in price. If you do that you get (my data only goes back to 2006) a positive correlation of 0.58 for ETFs and a negative correlation of 0.55 for bars & coins. Which suggests to me ETFs are the price makers and bars/coins the price takers.
LET'S HEAR FROM ARCHIE BELL OF THE DRELLS, SINGING ABOUT BANKSTER BILL AND THE SHILLS:
ReplyDeleteHi everybody
I'm Bankster Bill of the Shills
From New York City
We ghost bid and we suppress
Just as good as we want
In New York we just started a new scam
Called the “Shorten It Up”
This is the music
We shorten it up with
First shorten up on the contracts
Come down now, silver
I want you to short it up for me now
Oh, yeah
Shorten up on that gold now
Short it up
Ha, ha, yeah
Now let that chart price fall down
Oh, yeah
Shorten up on that option now
Yeah, you do the shorten up
Yeah, now
I said, if you can do it now
It sure won’t be tough
Now look here, come on now
Now make it fall now
Let's shorten it up now
Do the shorten up
Everybody can lose it now
So get to it
We're gonna shorten up
Let's do the shorten up
You can do it now
So baby, get to it
Look out below now
It’s the bankster’s last resort
Everybody can lose it
And you can’t get too short
Come on and shorten up
Let's shorten it up now
Let's shorten it up now
Shorten it up
Do the shorten up
Come and shorten it up
shorten it up now
Come on now, Billy
Shorten it up
Oh, yeah
Sock it to them now
Shorten it up
Come on and shorten up that gold
Oh, yeah
Now look here
I want that chart price
To fall down there
Shorten it up now
Oh, yeah
Now shorten it up, option
Yeah
Now everybody shorten it up now
Now look here
We gonna make it fall down for you now
We gonna make it fall down now
Shorten it up
You can get it
Look out below
Pull out the rug
Shorten it up now
Everyone trader outta cash
Come on and shorten it up
Shorten it up now
You can do it...
Bron -
ReplyDeletewe need to look at average demand in each category before and after the ETFs were created... not aggregate since the ETFs were created.
if you have that data, I am guessing it will tell a different story.
-KD
Bron-
ReplyDeleteI think we need to listen to The Hollies:
"IT AIN'T LEGAL, IT'S OUR BIG SHORT"
We’re never long
With many a rug pulls
That leads us to way down there
Who knows where
And we’re strong
Strong enough to tank the price
It ain't legal, it's our big short
Our welfare is our big concern
No burden our position to bear
We'll get down there
For we know
It will not encumber us
It ain't legal, it's our big short
If we’re driven at all
We’re driven to suppress
That silver price chart
And we collude we confess
We get our cash from the Fed
It's a big short load
From which there is no return
While we're on the way down there
Profits we’ll not share
Our short load
Doesn't weigh us down at all
It ain't legal, it's our big short
It’s our last resort
It ain't legal, it's our big short
Now Let's Here's From James and Bobby Purify
ReplyDelete"I'M YOUR BANKSTER"
I pull the string and I'll wink at you, I'm your bankster
I'll do funny things if you want me to, I'm your bankster
Mm. I'm yours to have and to hold
Darling, I've got full control of your silver
I Pull them little strings and I'll kiss your lips, I'm your bankster
Snap my fingers and I'll turn me some paper, I'm your bankster
Mm, your every trade is my command
All you got to do is wiggle my little hand
I'm your bankster
I'm your bankster
You’re my toy, just a funny boy
You makes me laugh when you're blue
Just be wonderful, just do what you’re told
You’ll do anything for me
I'm your bankster
I'm your bankster
I just pull them little strings and I'll sing you a song, I'm your bankster
Make you do right or make you do wrong, I'm your bankster.
Mm, treat me good and I'll do anything
I'm just a bankster and I hold your string,
I'm your bankster
Your walking, talking, kissing, loving bankster
You’re hanging on my string,
I'll do anything, love you 'n' kiss ya
I’m your bankster.
Hi Bron,
ReplyDeleteThanks for your post and site.
Off topic but I came across the following page a couple of days ago and it caught my interest:
http://pragcap.com/a-possible-model-for-the-price-of-gold
The valuation model seemed to correlate reasonably well with the price over the period 1982 to 2011.
I was curious and wondered what the model would show post 2011, so downloaded the relevant data and did a bit of number crunching.
I seem to have replicated the results
https://dl.dropboxusercontent.com/u/21076225/gld%20model.xlsx
The model seems to work up to 2011, after which the relationship with real interest rates completely breaks down.
Was interesting to me.
Alex
LET's GET BACK ON TOPIC---SHALL WE?
ReplyDeleteHERE'S ANOTHER FAMOUS "TWIN-SPIN"!
SIDE 1:
UNCLE GLD/ADMIRAL SLV
We're so sorry, Uncle GLD
We're so sorry if we caused you any pain.
We're so sorry Uncle GLD
But there's no gold left at home
And I believe it’s gonna drain.
We're so sorry but we haven't replaced an ounce all day.
We're so sorry, Uncle GLD
But if anything should come in well be sure to report a gain
We're so sorry, Uncle GLD
But we haven't stacked a bloody bar all day.
We're so sorry, Uncle GLD
But the kilo’s on the melt and we're so easily compelled to say
Gold across the water. (Water)
Shipped across the sky.
Bars across the water. (Water)
Heads each day to Shanghai.
Admiral SLV notified me,
He had to have some worth or he couldn't get to sea.
I found another crook and I charged another fee, heard another lie.
(Another Lie?) (Tungsten was in the melt so I told another lie.)
Gold across the water. (Water)
Melted on the fly
Kilos across the water. (Water)
Heads each day to Shanghai
SIDE 2:
REDEEMIN’ AND A DRAININ’
All the shares redeemed and it’s all empty.
Banksters in the vault-just another day.
Gold is safe in Shanghai just been taken away
Redeemin’ and a drainin’ Its not going to stay.
They dropped it for a refiner they passed along the way.
Well they took the gold with ease and pretend to pay.
They knew the tunsten’s in the gold;
They knew its gonna stay.
Redeemin' and a drainin’all the gold today.
All the shares redeemed-GLD is empty
Bankster’s in the vault-just another day
If they didn't tell us, It could leave today;
Redeemin’ and a dreamin' –all the gold’s away
Redeemin’ and a drainin’ GLD today
Redeemin’ and a drainin’ -its in Shanghai today
Apologies for not responding, have been snowed under. Have been having a offline discussion with Kid Dynamite and will do a followup post.
ReplyDeleteI have been looking at this simplistically, seeing the increase in coin/bar from 100t to 300t post 2008 vs ETF's relatively flat demand (apart from 2013) as indicative of who was driving price.
Thinking further about the GFMS stats and price formation I think it is problematical to derive much from them as GFMS make supply = demand, it doesn't really tell us about the bid and ask depth in the market which is what actually affects the price.
Hey---I noticed another bankster jumped to his death:
ReplyDeletehttp://nypost.com/2014/03/17/investment-banker-leaps-to-his-death/
Well---LET'S HEAR FROM THE "LOVIN' SPOONFUL"
"JUMPER IN THE CITY"
Hot town, jumper in the city
Back of his neck getting dirty and gritty
Pushed down, isn't it a pity
Always seems to be a jumper in the city
All around, banksters looking half dead
Flopping on the sidewalk, streets looking mighty red
But at night the world is cold
Stay up and suppress the gold
He’s gonna manipulate all night
Despite the law it'll be alright
And babe, don't you know it's a pity
That the days can't be like the nights
It’s a jumper, in the city
It’s a jumper, in the city
Cool town, evening in the city
Dressing so fine and looking so pretty
Fat cat, isn’t it pity
Buildings on every corner of the city
Now he’s wheezing like a bus stop
Running up the stairs, tryin’ to make it to the rooftop
But at night the world is cold
Stay up and suppress the gold
He’s gonna manipulate all night
Despite the law it'll be alright
And babe, don't you know it's a pity
That the days can't be like the nights
There’s a jumper, in the city
There’s a jumper, in the city
------ instrumental break ------
Hot town, jumper in the city
Back of his neck getting dirty and gritty
Pushed down, isn't it a pity
Always seems to be a jumper in the city
All around, banksters looking half dead
Flopping on the sidewalk, streets looking mighty red
But at night the world is cold
Stay up and suppress the gold
He’s gonna manipulate all night
Despite the law it'll be alright
And babe, don't you know it's a pity
That the days can't be like the nights
There’s a jumper, in the city
There’s a jumper, in the city
So--Ahead of All The Anticipation Of The Fed-Taper-Pation, Let's Hear From The BEE GEE's Shall We?
ReplyDelete"Janet, How Deep Is Your Taper?"
“Janet, How Deep Is Your Taper"
I see your eye on the back of the “one”
I feel the ink engraved on the Washington
And the moment I hear your worthless blather
I wanna get in my car and run
And you come to me on all my screen TV’S
Keep me drowning in paper and then abruptly leave
And when do you taper the taper?
Janet, How Deep Is Your Taper?
How deep is your taper?
How deep is your paper?
I really need to learn
'Cause we’re tired of your “fed tools”
Bringing gold down
When you all should let us be
We don’t belong to you, trust me
I can’t believe in you
You know the printing of the paper is power
You're the blight in our deepest darkest hour
You're my bankster who has caused our fall
And you may not think, we care for you
When you know down inside, that we don’t give a poo
And when do you taper the taper?
Janet, How Deep Is Your Taper?
How deep is your taper?
How deep is your paper?
I really need to learn
'Cause we’re tired of your “fed tools”
Bringing gold down
When you all should let us be
We don’t belong to you, trust me
Jake,
ReplyDeleteYour songs are becoming spammy, and the one on the banker is insenstive to say the least.
Occassional one on topic, no problem, but this blog is not a platform for other people's content.
So Who's Content Is This Blog About?
ReplyDeleteYours?
Whata A Bore.