The GLD Trust Is Being Drained

It’s a matter of “trust.” How much do you trust GLD’s vault custodian, HSBC? Has HSBC given us any reason to place trust in both its financial reporting and the way it operates?  HSBC has been already been nailed for rigging LIBOR and the LBMA gold fix.

GLDpic

I wonder how many of those bars shown in the picture do not belong in the GLD segregated area but were moved there to give the illusion that the GLD account was filled with gold bars?

Another 9 tonnes of gold was removed from the GLD trust yesterday. This takes the “reported” amount down to 751 tonnes. The last time the reported amount of gold in the trust was at this level was November 18, 2008. The price of gold was $738.

Individual share selling of “odd lots” of GLD – where and “odd lot” is defined at as anything less than the 100,000 shares required to redeem gold from the Trust – does not trigger the removal of gold from GLD.  Poor investor sentiment does not trigger the removal.  The only way gold is removed is if one of the Approved Participant bullion banks collects 100,000 share baskets and turns them in exchange for the delivery of gold bars.   Once that gold is removed, it disappears.

On March 24 this year, GLD was reporting 821 tonnes.  Since then, 70 tonnes have been removed.  Most of it has been removed since late August.  It’ s no coincidence that the drain in gold from GLD happens to coincide with the strongest seasonal period of the year for Chinese and Indian gold buying.  Recent reports suggest that India imported 131 tonnes of gold in September.  This number would not include the large amount of gold being smuggled into India.    The Russian Central Bank released its gold holdings thru September, which showed it added 1.2 million ounces – or roughly 34 tonnes.  This was the largest monthly addition to its gold holdings ever reported.   And the most recent data from China show that, since returning from the observance of a national holiday, the Chinese demand for gold in the 2 days prior to the holiday shutdown and the 3 days after re-opening was over 66 tonnes.

With numbers like this being reported from the largest gold buying areas in the world, it’s hard to believe that the gold being removed from GLD is being used for any purpose other than to meet western bullion bank delivery requirements into these countries.

While it is clear that GLD is being drained in order for the bullion banks to avoid delivery default, it would be infinitely more interesting to know how much of the gold still sitting in JPM’s vault has paper claims attached to them.  That is, to what extent has this gold been hypothecated.  But because of the protections afforded the GLD Custodian by the investment prospectus, not even the GLD auditor can make unannounced visits to inspect HSBC’s files on this matter.

So, do you really trust HSBC and its custodianship of GLD gold?

 

13 thoughts on “The GLD Trust Is Being Drained

  1. great article dave. I don’t believe anything they say about the GLD fraud, including their reported tonnage. what is the leverage ratio of paper gold to physical? I have read upwards to 100x. Hope I live long enough to witness the failure to deliver.

    1. Agree, great article.
      Some say global commitments are as high as 200 for each underlying physical unit.
      The culture of financial leverage of marketless profiteering speculators, bobble-head banker dolls and HF trading cutouts sweeps the heights and depths of the lawless ocean of manufactured liquidity. Fueled by rebundled, rehypothecated, repurchased reserves, no savings or investment vehicle is safe from their derivative magic carpets increasingly bold and reckless dives and “recoveries” that defy math and physics, from digital dusk to “fatfinger” dawn.
      The day the plastic rug is pulled out from under them, all markets and bobble-heads oscillate to whiplash because sympathetic feedback returns and amplifies with mathematical and astronomical precision.

  2. Rehypothecation is the big black swan in the gold community. No problem as long the traded gold is not demanded for delivery. But once a critical mass of paper gold holders ask for their gold the market is on fire. Will it ever happen? Probably once the stock markets roll over into bear market territory. That’s why the central banks have to keep the balls up in the air. Their job is getting more difficult by the day, though.

  3. But, but…… trader Dan says that the price of gold is not manipulated, and is largely determined by the relative strength of the dollar. He says if the US money supply is doubled, but tripled collectively in other countries, gold will go down (as opposed to doubling here and tripling elsewhere). My example is overly simplistic to make my point, but his is ludicrous IMO.

    1. I don’t know where Dan’s train wheels came off the rails. Maybe he fell into a clan of glue-sniffing white supremacists in his home State of Idaho.

      1. His name isn’t “Trader Dan”, it’s “Traitor Dan”.

        I think he does it for click bait. He is trying to get some subcription service going. He has a real cult growing over there. Maybe he can move from reading charts to sheep entrails to gather a wider audience.

    2. 1) Anyone who claims gold and silver prices are not manipulated is either complicit or ignorant.

      2) How could the ‘price’ crash when the physical demand of a commodity is more than the physical supply for over 10%?

      Silver is one of those commodities that wildly violates the basic law of demand and supply. Check out the public data at the Silver Institute which proves the second (2) point.

  4. “I have heard our swaps criticized as cover ups”—speech by Alfred Hayes, president of Federal Reserve Bank of New York, at Economic Club of New York, April 22, 1963. Just before the new clad coins started circulating in late spring 1965, Hayes had his minions remov8ing quantities of silver coins from the country’s largest banking district, shipped to Treasury, processed into bullion, and gifted to the Silver Users Association at toss-away rates—to suppress silver prices. Simultaneously the banks, the FED and the government blamed “hoarders” for coin shortages!

    Gold swaps were arranged to shuffle gold from CB to CB and later “trusts” like GLD so as to con anyone from saying deceptive practices are in place. A simultaneous audit of gold in GLD and the top 20 CB’s well—that’s asking too much. We can’t even get Fort Knox audited. Small folks do not understand monetary science! “ Alfred Hayes (Pilgrims Society—the group I’ve been bringing to PM investors attention since December 2004— stated in a speech at the IMF on August 31, 1975)—

    “I am particularly proud of the Federal Reserve swap network, in the development of which I was involved from its inception, linking the Federal Reserve and 14 other central banks and the Bank for International Settlements. Gold has long been viewed by many as a barbarous relic and demonetizing it and phasing it out of the system completely seems to have a good deal of appeal in some quarters.”

    (Vital Speeches Of The Day—source) see http://www.nosilvernationalization.org/69.pdf for more details, “Paper Money Mobster Speaks.” That same day Hayes became president of Morgan Stanley International, founded in 1935 by the grandson of the original J.P. Morgan—Henry S. Morgan—and his partner, Harold Stanley. These other four figures are also confirmed to have been members of The Pilgrims Society, founded from the wills of Cecil Rhodes to effect “the seizure of the wealth necessary” (Review of Reviews, New York, May 1902, page 557.

  5. Great analysis, Dave.

    By the way, I appreciated the shout out you recently gave to this Watchman and the Truth HQ. I’ve long followed your work, and I respect what you’ve been doing here.

    Keep giving the enemy a bloody nose, sir!

    -WW

    1. Thanks for the feedback WW – I just discovered your site about 3 weeks ago and I check it almost everyday for updates. Back at ya on attacking the enemy!

  6. I had investment of GLD a few years ago. Then I decided its all pointless. You either invest in physical solid gold in your hand or shares in your portfolio, but not in the between defeat the object of each other. I sold all my GLD holdings in my HSBC premier account in HK for real physical gold instead.

    A few times, the staff over the account keep recommending me to invest paper gold. I bet they must have commission to sell me the stale product. Otherwise, they won’t be that pushy.

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