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« Gold moves up on Pakistan Insurgence | Main | A Competition by Kitco »

Gold Inflows into ETFS Up 3 Fold: The Telegraph

Gold Chart 23 apr 09.JPG

Chart courtesy of Stockcharts

Inflows into gold ETFs continued to grow throughout the quarter, with investors buying a record 469 tonnes of gold, dwarfing the previous quarterly record of 145 tonnes, set in the third quarter of last year. This took the total amount of gold in ETFs to 1,658 tonnes, worth US$48.6 billion, the World Gold Council said. A snippet taken from The Telegraph

Commodityonline has this snippet about silver.

According to CPM Group, investors bought 70m ounces of silver in 2007; 100m in 2008; and based on current trends, they’re on track to buy 180m ounces in 2009.

We can see that the popularity of the EFTs is enormous as investors seeking to include precious metals in their portfolios pile into the funds. We can also see from the above chart that gold producing stocks no longer display a leverage to gold prices, in fact the stocks are struggling to keep up with gold. We could argue that the stocks are telling us that gold is over priced and therefore due for a correction or the ETFs offer a much easier way to have some involvement with precious metals. So the cash that should be going into producers is being diverted to the ETFs. This raises the question of whether or not the historical leverage of stocks to gold will return or will they be considered just too risky to be considered. Who wants to research stocks and analyze each one in terms of management, political risk, the validity of the discovery, etc. This is something that we are wrestling with as our unease with the administration of the funds deters us from taking that route, other than the possible 'pop' at an options trade with GLD.

Going forward we still expect the near term to be one of sideways action for this market sector. However once this bear rally peters out the attention of the investors could quickly switch to precious metals causing a spike in gold prices. So our core position remains in place just in case we experience such a spike. Later on this year we do expect gold to move a lot higher and set new records. If this happens and the stocks put in a mediocre performance we will need to re-examine our strategy. For instance, in the UK you can place bets on golds movements and your winnings are tax free. It is odd that investments are taxed and straight forward gambling is not.

Your thoughts please!

Have a good one.

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Reader Comments (2)

The gold and silver flowing into the ETFs tell you two things:

1) People are starting to understand the importance of gold and silver in terms of preservation of wealth, and that's smart, BUT at the same time,

2) There are a lot of very misinformed or downright STUPID people who don't understand that the ETFs are just PAPER trades complete with counterparty risks and therefore NO safe haven (apart from CEF and GTU)!!!

The whole purpose for owning gold and silver is b/c they are NOT PAPER!! They have NO counterparty risk. They cannot be created out of thin air. They have REAL value and that value is recognized throughout the world. The ETFs are PAPER ONLY (except for CEF and GTU, which actualy have the gold and silver allocated, and SLV only if you haveover 100K shares and want to take delivery of such a large load of silver) and any profits you make will be PAID in PAPER ONLY.

So once again, as many of us have warned over and over and over--

BUY PHYSICAL GOLD AND SILVER...NOT THE ETFs IF YOU ARE LOOKING FOR A SAFE HAVEN...a place to put your money where your govt, now beholden to and controlled by TPTB, the WallSt Bankster Gangsters, cannot rob you blind by devaluing what you own!! (outside of temporarily through their price-suppression schemes on the COMEX and thru under-the-table gold leasing and sales...and I have NO doubt that the silver and gold in GLD and SLV for example are NOT allocated and are actually being leased out the back door for shorting and selling).

Since the Federal Reserve Banksters (private banksters under the control of the intl Banksters of Europe) took over the control of the money supply of this country back in 1913, the dollar has lost over 96% of its value!!

Even if you think you're going to just use the ETFs as trading vehicles, know that it is VERY likely that they are being used as part of the price-suppression scheme, so you're at cross-purposes with yourself. And secondly, if you do decide to use them anyway, at least take your profits and buy physical gold and silver with them...o/w you're just another bagholder of the USSA and its soon to be worth(much)less paper money...jt

April 23, 2009 | Unregistered Commenterjt

The trouble is: capital which, before the creation of ETFs, would have been invested in mining companies, especially the juniors, is now going into ETF purchases. Result 1: no matter what price gold reaches, investment in all gold and silver mining companies, and especially the juniors, will remain absent. Result 2: those of us who invested in precious metals companies, and especially the juniors, seemed doomed to see all our stock prices remain 85 % below what they were before ETFs hogged all the PM investment dollars.

Please prove to me it ain't so! Please!

April 23, 2009 | Unregistered CommenterN

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