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MINING.com

MINING.com

MINING.com is a web-based global mining publication focusing on news and commentary about mining and mineral exploration. The site is a one-stop-shop for mining industry…

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Gold Prices Near $1,800 As Investors Pile In To ETFs

The rally in the gold price gained fresh momentum on Tuesday as investors piled into physically-backed gold ETFs to secure hard assets amid expectations of continued global ultra-low or negative interest rates and currency debasement.

Gold for delivery in August, the most active contract on the Comex market in New York, touched a high of $1,786.10 an ounce, the highest since October 2012 and up 17% so far this year.

The last time gold traded above $1,800 an ounce was September 2011, but it ended that year at $1,565 an ounce.

The World Gold Council reported that Friday saw a massive 27.3 tonnes (974,000 ounces worth more than $1.7 billion at today’s prices) inflow into gold-backed exchange-traded funds (ETFs).

The world’s largest gold ETF – SPDR Gold Shares or GLD – received the lion’s share with Friday inflows of 23.1 tonnes or 742,492 ounces, coinciding with the expiry of June GLD options.

On Monday GLD hauled in another 6.7 tonnes, or more than 216,000 ounces, bringing total holdings to 1,166 tonnes (37.5m ounces) worth $66 billion, the highest since April and February 2013, respectively.

Rock beat paper, briefly

While launched a full 18 months after the first physically-backed gold ETF was created in Australia, GLD quickly dominated the market.

GLD was listed on November 18 2004 and saw a pretty good first day. Investors bought just over 8 tonnes, or 260,000 ounces of gold, affording the fund a net asset value of $115 million.

A mere two days later it would cross the $1 billion mark, and by the time Thanksgiving arrived the following week, gold bugs had snapped up more than 100 tonnes. The 1,000-tonne market would be crossed in February 2009.

On August 22, 2011, when gold was hitting record highs above $1,900 an ounce GLD became the largest ETF in the world briefly surpassing the venerable SPDR S&P 500 trust (assets today $273 billion) at a net asset value of $77.5 billion.

Gold holdings in the trust would peak more than a year later in December 2012 at 1,353 tonnes, or 43.5 million ounces.

By Mining.com 

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  • Robert Gates on June 24 2020 said:
    "SPDR Gold Shares or GLD – received the lion’s share with Friday inflows of 23.1 tonnes or 742,492 ounces"

    Can you provide any verifiable evidence to support your gold holding claims here? How reliable are GLD's holding reports? GLD does not give retail investors the right to redeem for any of its mystery physical gold holdings. This fact alone ensures the GLD shares to be nothing more than paper at the end of the day. GLD also has a glaring audit loophole in their prospectus that states they have no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this backdoor to the fund. Some other red flags I've stumbled upon, verified and welcome everyone else to verify for themselves:

    "Did anyone try calling the GLD hotline at 866 320 4053 in search of numerical details on GLD's insurance? The prospectus vaguely states "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." When I asked about how much of the gold was insured, the representative proceeded to act as if he didn't know and said they were just the "marketing agent" for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors."

    "I remember there was a highly publicized visit by CNBC's Bob Pisani to GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this "GLD" bar was actually owned by ETF Securities."

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