GLD inventory continues to decline and many theories abound regarding the 'drain'. I like most of all the recent TFMetals article discussing the GLD decline, it amuses me that the guy refuses to address (head on) the issue of whether the inventory is real or not - best I can make out is that Turd is not in a position to admit the metal is real, too bad since it affects the stability of some of his other arguments. Some good discussions came out of that thread - in particular I was interested in whether the 'real or not real' is a black & white question:
I wish my data could help with this question but it only makes things muddier - the key problem is 'which percentage is real, which is fake, and how can it be proved?'. Breaking it into falsifiable tests actually ends up working heavily against the initial assumption. Random example - deciding that all the Russian gold bars are fake would eliminate a small percentage but then you have the hairy task of researching which refiners are not legitimate, perhaps one might decide 'JSC Ekaterinburg Non-Ferrous Metal Processing Plant' is a fake refinery but then you have to contend with established history. Having the refinery is real but the bar numbers are fake then you have to wonder what became of the rest of the gold bars they produced ... and so on. Successfully debunking all those steps means (congratulations) you may have conclusively proved that 11 bars are fake ... now for the remaining 201,221 bars across 70 different refiners - I hope you can see the effort involved to conclusively prove a given percentage of the inventory is not real. I haven't ever seen this level of analysis from the 'no-metalists' to support their version of events, and I can only hope that hopefully stronger models (of the gold market) will always replace weaker models, like with Bron Suchecki's casual demolition of Dave in Denver's shortage claims.
|Gratuitous shot of Russian Gold bars (not Ekaterinburg).|
The 'no real metal' folk have a big job ahead of them,
disproving images like these and countless others.
* IMPORTANT NOTE: Some of the signatures we see will be a result of re-classifications. This is a limit of reading error with the data and for now it is safe to treat my figures with a plus or minus 3%. Also there are a few small discrepancies like we see 86,453 bars while the most recent document says 86,452 we're looking into this. The numbers here indicate time of writing and are really more of a 'BACK OF THE ENVELOPE' calculation, pending further processing.
The dark bullion data will cause some difficulty for Mr Turd Ferguson because if he is already not liking the idea of all the gold (in GLD) being real then he will certainly not appreciate my suggestion that the GLD data shows us an image of real inventory 180% larger than what is officially listed.
My gold numbers currently come from 19 different gold ETF's - represents approximately 56,830,903 fine oz of 'currently visible' gold (however because I've been away recently, only the SLV and GLD records have been brought up to date as of 3rd May 2013, some of the older goldmoney records are quite stale).
Nick Laird of Sharelynx tracks a wider range of ETF's as well as the comex inventory- his tally is even larger; accounting for 86,150,408 oz of visibly held registered gold as of 7th May 2013. (note: there are a few ETF's that I don't track because their bar list is either not generally accessible or not processable - like ZKB for example).
So, my total bar signature count is closer to 201,232 gold bars, expressed as fine oz:
the breakdown is: GLD (34,676,331) + plus other ETF's (22,154,572) = 56,830,903 total Visible oz.
A further 23,697,515 oz is currently 'invisible', for a total of around (80,528,418 fine oz). Astute readers will notice here that the dark bullion calculation here (63% of visible gld) doesn't completely match the 80% figure at the top of the article. Although I lack the time to fully explain that, the reason is because some bars which have appeared at least once in GLD, do appear in the other ETF data as well. This would be best represented graphically*.
Anyway, the reason I'm really writing is that while pondering these figures last weekend, as well as an observation from Bron Suchecki regarding Johnson Matthey's market share, I came to a nifty conclusion that might allow us a small insight into the total size of the 'gold pool' that these banks have command of. A few months ago I wrote about a peculiar formation of 6-digit bar sequences from refiner Johnson Matthey, it appears to start at '100000' and appears almost unbroken with the highest being 217,272. This suggests a production run of at least 117,272 bars (which we know has spanned several years). NOTE: Sequence does contain some duplicates.
In the data (scrubbing out some duplicates, and using round numbers from here) we know of approximately 64,000 bars in that sequence (~54%), and we might surmise that the remaining 53,000 bars (~46%) must be out there somewhere - with the best classification for those being 'Ghost Bullion' (since we cannot measure them directly although we see something, and some bars may already be dead but appear alive). My main point is the Johnson Matthey Sequence represents 32% of our total known signatures (sample size), so if we could say that the distribution of JM bars in the large sample of gold we can see fairly and consistently matches the distribution in the London Gold 'pool', then we could put forward that the total expected bar signatures is somewhere in the realm of:
Total London Gold bars = ( 117,272 / (32/100) ) = 366,475 bars = approx. 146,590,000 oz = approx. 4,559 metric tonnes. This crude estimate is much lower than Bron Suchecki's estimate of the total size of the OTC 'dark pool' market, but really I guess I just wanted to demonstrate if you're still thinking in terms of 'oh noes there is a shortage of 400 oz gold bars' then you need to be slapped hard ... REALLY HARD.
* Apologies for the crudity of these ideas being put forward. I'm still under the pump at work and hence incredibly time-poor, but I wanted to float these ideas for discussion.
p.s. Most of these totals were approximates at time of writing. Today, I see that GLD is still being 'drained', however in perspective against the total amount of gold floating around out there, the amount being 'drained' becomes a 'YAWN' event - for now, anyway. Wake me up when 50% of GLD is gone.
p.p.s. The typical defense of the 'no-metalists' is that they will quickly jump to the 'oh the gold is real but there are multiple claims on it' line of argument ... no no no, not good enough unfortunately - you gotta stick to one interpretation because otherwise it's like chasing each-other around the maypole. I discuss the stratified levels of argument here: 'How Can We Trust the Bar List Data?'