More huge gold purchases into US gold ETFs – almost 46 tonnes in 2 days

Gold TodayGold closed in New York at $1,207.50 down from $1,229.30 on Monday. In Asia, it rose back to $1,217 ahead of London’s opening. It fell back but then recovered in London and at the LBMA price setting it was set at $1,218.75 up from $1,203.65 yesterday. The dollar index is slightly weaker at 97.42 up from Monday’s 97.52.

The dollar is stronger against the euro at $1.1003 up from $1.1024 on Monday. The gold price in the euro was set at €1,106.97 up from €1,091.80.

Ahead of New York’s opening, the gold price was trading at $1,217.05 and in the euro at €1,106.16.  

Silver Today –The silver price closed in New York at $15.16 down 20 cents.  Ahead of New York’s opening the silver price stood at $15.22.

Price Drivers

Monday saw another purchase of 19.331 tonnes after Friday’s purchase of 19.332 tonnes into the SPDR gold ETF and a purchase of 3.00 tonnes after Friday’s 4.00 tonnes into the Gold Trust. The holdings of the SPDR gold ETF are now at 752.294 tonnes and at 187.50 tonnes in the Gold Trust.

In the SPDR [GLD] gold ETF we are clearly seeing a very large institution buying heavily on an ongoing basis. Again, we see in one day purchases of 22.331 tonnes of gold into the two main gold ETFs in the U.S. Yesterday saw purchases by U.S. investors of 23.332 tonnes of gold, into the funds.

We still don’t believe that the gold price is reflecting these purchases. If these had happened over a week we would have opined that they were extremely good weeks of gold purchases. So we ask, “Is this an institution like Paulson’s funds buying back holding sold in the last quarter or another aggressive U.S. fund. Or it could be a Chinese institution stocking up its holdings held outside China?”

These are very large amounts for the gold market, big enough to drive the gold price higher once market liquidity is squeezed. Nobody can say when this will happen but it must be close.

To give you perspective, the Chinese and Russian central banks each bought over 20 tonnes in a month. U.S. investors bought more than the total bought by these two in just two working days.

In the background we are seeing the gold market change structurally and in its direction. As we say above, it is a matter of liquidity in developed world markets. Something must give if this weight of buying continues!

Silver – Silver price volatility is being seen in line with the volatility in gold. This tells us that if gold does run higher, silver will follow it or run ahead of it.


Julian D.W. Phillips | | StockBridge Management Alliance

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