Mali to get $1.2 billion from miners after talks
Mali’s military leadership has taken a harsh stance against international miners with an extensive overhaul of the sector in recent years.
On Wednesday gold continued to drift lower with December futures trading on the Comex market in New York exchanging hands at $1,325.90 an ounce in early morning trade, down $4.50 from Tuesday’s close.
Gold touched a two-year high in July around $1,380 an ounce and year to date the metal is up 26% or close to $280 an ounce, one of its best annual performances since 1980.
Saxo Bank’s head of commodity strategy Ole Hansen, says gold has failed to break higher despite weakness in US bond yields and continues to trade in a tight range.
Hansen sees further strength in the dollar putting more pressure on the gold price as it enters make or break territory and a move below $1,315 which the metal has bounced off a few times recently or a break through the $1,305 level would signal more weakness to come.
Last week according to the CFTC’s weekly Commitment of Traders data up to September 20 released on Friday speculators showed impatience with gold’s inability to break out of its $1,300–$1,350 an ounce range, adding more than 10% to short positions and cutting longs by the same proportion.
On a net basis bullish bets have now fallen to 21.9 million, down 24% from the all-time high and the lowest net position since May’s correction, when gold came close to falling through the $1,200 an ounce level.
Investors are also pulling out of top physical gold-backed exchange traded fund – SPDR Gold Shares (NYSEARCA: GLD). GLD’s holdings hit a 2016 high at the same hedge funds were stocking up on futures lots in July, but some 33.6 tonnes have been pulled out from the fund’s vaults since then, reducing the value of holdings by $2.2 billion.
GLD dwarfs other physically-backed gold ETFs holding more than 45% of the global total and after a few dismal years, GLD rise in assets under management in 2016 surpassed the banner years of 2009 and 2010 when investors caught in the global financial crisis and spooked by quantitative easing piled into GLD.
2 Comments
Leonard
“GLD dwarfs other physically-backed gold ETFs holding more than 45% of the global total and after a few dismal years, GLD rise in assets under management in 2016 surpassed the banner years of 2009 and 2010 when investors caught in the global financial crisis and spooked by quantitative easing piled into GLD.”
This is extremely questionable. Paper gold GLD claims to be fully backed by physical gold bullion but yet it refuses to give retail investors the right to redeem for any of these ‘claimed’ gold bullion. This fact alone would mean GLD shares are nothing more than paper at the end of the day. Furthermore, GLD’s prospectus is chalk full of weasel clauses and legal loopholes that allows the fund to get away without the full physical gold backing. One good example of this is the clause that states GLD has no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this audit loophole. I’ve also verified the following to be true and welcome everyone else to do so:
“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 well documented 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.”
Ronald West
Excellent comment Leonard. Anyone who thinks GLD is an investment in gold is deluding themselves. GLD is, at best, an index fund, to speculate in the ups and downs of the gold price with, using derivatives to create paper profits. Given that none of one’s investment is redeemable for the real thing, is further proof that GLD as a long-term investment in gold, is about the same as expecting to be able to redeem a paper US dollar bill for gold. Not going to happen. My advice to anyone who wants to invest in gold, is to invest in physical GOLD, not GLD. Otherwise, when the need for having real gold in your hands arises (such as the US dollar failing), it will be necessary to already have real gold in hand or nearby ready access to it, in order for it to be of service to its holder. When the crunch comes, whoever is holding the gold is the one who will benefit from it, regardless of who owns it. Otherwise, the Fed would return Germany’s gold to them. Gold and silver reigns supreme as non inflatable money.