Gold ETF Holdings Plummet
Gold ETF holdings have been steadily declining so far this year. Investors sold a net 106.2 metric tons (approx. 3,414,330 ozt) of ETF gold products valued at $5.4 billion in February. In March, investors sold a net 26.1 metric tons (approx. 839,115 ozt). George Soros’ exposure to gold was reduced by 55% last quarter. Gold is in a five month decline, its longest stretch of monthly losses since 1997.
Understandably, some participants question gold’s resilience. Besides big hedge funds and names such as Soros, institutions like Credit Suisse, Barclays, and Goldman Sachs have cut their 2013 gold price forecasts. Despite Soros’ and bullion bank forecasts, it still seems as if the risk to the downside will stay within the 2+ year trading range. And, if equities start to falter (actually ‘when’, not ‘if’), gold will regain its footing.
Always remember, the ETF gold investor and the physical gold investor are nothing alike. The first likes paper products, seeks a proxy for the underlying asset with little to no desire to own the asset, is extremely fickle when the market turns, and is on to another asset class with the stroke of the keyboard. The physical investor wants to hold the physical metal, sees it as long term protection against rampant currency creation, values its privacy and portability, and ultimately views their physical holdings as insurance against economic and geopolitical uncertainty.
It’s not bad to have some of the former as long as you have a solid position in the latter.
All Things Considered – John’s Commentary:
Consider swapping some of your gold for silver due to the favorable gold/silver ratio. Silver is cheap at these levels. You should be nibbling away at silver to add to your position.
Quote of the day: “Why is it that we can’t wait to take advantage of sales on electronics, clothes and food (you fill in the blank) – yet many are reticent, even scared, to take advantage of a sale on gold and silver?” – John Fisher
