GLD Fund: Divergence Signals Shortage
The comments below are an edited and abridged synopsis of an article by Jim Willie
The GLD Fund can serve as an early warning signal for a tight gold supply and corresponding gold price moves. It signals shortage and tight supply now, with a divergence between the gold price versus GLD inventory in tonnage.
GLD is designed to deceive the public. While investors might enjoy a rising gold price, their investment in GLD is used to keep the price down. GLD’s inventory is raided by the US-UK banks, and sold into the market regularly. GLD’s inventory is a massive vat for sale into the market, a method of price suppression by the bankers. With each raid on GLD, the gold price comes down.
There is a discrepancy now between the gold price and the critically low GLD vault inventory. The gold price is rising, while GLD inventory is falling, and the divergence has begun to show.
The effective zero level is far above the posted zero level, estimated at around 400 to 600 tonnes of gold. This is important, since the official GLD inventory is currently just above 750 tonnes. It has varied from 750 tonnes to 850 tonnes in the last 18 months and is now near the effective zero mark. As the GLD vaults reach effective zero, Wall Street and London lose the ability to dump that is intended to pull the gold price down.
GLD is a private warehouse run by the Bank of England. When public/central bank demand has to be met, they raid the inventory by redeeming share baskets and removing physical bars. Share redemptions (selling paper) drive the price down, but the process is actually driven by draining physical at the banker slush fund. There is physical gold, but it belongs primarily to BOE and certain billionaires. Since the Fed went dovish in December, the gold price has been rising while GLD tonnage has been going down. The banks know the reset is here.
The signs of gold drainage lead to growing distrust in the US dollar and US Treasury. It affects the supply and demand equilibrium, and the result is financial instability. The true refuge will be gold held in personal possession or with trusted access by agents. The loss of trust in GLD and in the LBMA/COMEX, complete with lawsuits, could bring down the paper game.