October 03, 2008 at 11:00 am by Tom Lydon
The world’s largest gold exchange traded fund (ETF) has been getting a lot of attention amid the market turmoil, but the newly approved bailout plan could dampen enthusiasm for the safe haven investment.
The House gave the seal of approval to the $700 billion package, and now it’s off to President Bush for signatures. As soon as the measure was OK’d, the SPDR Gold Shares (GLD) went south.
The value of GLD in September rocketed by $4 billion as investors sought safe havens, reports John Spence for the Wall Street Journal. Assets are now perched above $21 billion. The amount of gold in the trust jumped by 16% last month, meaning that the fund holds just slightly less gold than Japan. Year-to-date, GLD is breaking even.
But since a price spike in September, volatility in the gold futures market has sent the ETF bouncing around like a ping-pong, sending it up sharply some days, down more on others. Yesterday, the fund closed down 4.2%. On Sept. 17, the fund shot up a whopping 10.9%, but on Monday, it declined 5%.
Shares in the fund represent about one-tenth of an ounce held by the custodian, HSBC Holdings PLC, in its London vault, or in the vaults of subcustodians.
The fund has become attractive for investors to own, as it makes it easy to invest in gold without having to hold the physical commodity itself and paying for the cost of insuring and storing it.
GLD isn’t the only gold ETF, but it’s by far the largest. The two other funds are iShares COMEX Gold Trust (IAU) and PowerShares DB Gold (DGL). IAU holds physical gold, as well, while DGL tracks an index of gold futures contracts. IAU is down 0.3% year-to-date, while DGL is down 1.9%.
Platinum prices are at three-year lows, at $936.50 an ounce. The price has declined more than 50% since hitting a record high of $2,290 in March, reports Pratima Desai for Reuters.
Tags: DGL, GLD, Gold, IAU, Platinum, Precious Metals
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October 4th, 2008 at 4:45 pm
The paper gold & silver Comex prices as reflected in ETF prices are wildly decoupling from the physical prices. 99% of bullion shops are out of all physical gold & silver stock & report massive hoarding of precious metals when the metals do become available. London commodity exchanges are reporting that there is almost no gold & silver to complete contracts. Here’s a look at physical precious metals exchange prices, like bullion-direct, where limited product is available, compared to ETF type pricing:
Current paper gold price: $835/oz
Current GLD 1/oz gold price: $82.59
Current physical price: $955 American Buffalo Eagle
$945 American Gold Eagle
Current silver physical price: $11.05/oz
Current SLV 1/oz silver price: $10.99/oz
Current 1 ounce silver BD Eagle price: $17.23
Current Johnson Matthey BD 100/ounce bar pr: $2000
In short the banks are blatantly manipulating the paper prices of precious metals & shorting them in order to recapitalize themselves off your life savings. The government, including COMEX are crooks in on the redistribution of wealth.
But the physical metals only. The premiums above should by an alarm sound to all investors that banks & the feds are up to no good.