Reuters reports that SPDR Gold Trust holdings steady at 1,109.81 T.
SPDR Gold Trust holdings steady at 1,109.81 T
Fri Jul 10, 2009 4:22am IST
TOKYO, July 10 (Reuters) - The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said holdings stood at 1,109.81 tonnes as of July 9, unchanged from the previous business day.
Following are changes in SPDR holdings;
Date: Total tonnes
July 8 1,109.81
July 6 1,120.19
June 30 1,120.55
June 25 1,125.74
June 22 1,131.24
June 5 1,132.15
June 3 1,132.50
June 1 1,134.03 -- record
May 22 1,118.76
May 13 1,105.62
May 6 1,104.09
April 23 1,104.45
April 17 1,105.98
As of Wednesday, there was open interest on COMEX gold of 370497 contracts, which translates as 1050 tons.
Now, everyone knows that the shares of securities in margin accounts, including GLD, can be lent by broker-dealers to short sellers, right? Not that many shares of GLD have been borrowed for this purpose. Cnn.com reports GLD short interest data.
SPDR Gold Trust ETF
Short Interest Date: Jun 25 2009
Short Interest Shares: 5,108,418
Short Interest Ratio: 0.4
Short Interest as a % of Float: n/a
Average Daily Volume: 15,291,300
Outstanding Shares: 190,400,000
Looking at this data, it would appear only 0.4% of GLD shares have been borrowed from brokers and shorted on stock exchanges. But what if more shares than GLD shares were being borrowed and sold somewhere else?
As I highlighted on Tuesday, GLD ishares are used to sell gold futures.
GLD is used to sell gold futures
To add insult to injury, GLD ishares are used to sell gold futures and drive down the price of gold. Investor Village explains about this practice:
bullion separately may be deposited and redeemed by "Authorized Participants" for Ishares that never even reached the Retail Market. There is no trust requirement for an Authorized Participant (read specified Bullion Banks and most likely friends) to even sell the ishares (GLD) (received on deposit) into the Ishare market. The Prospectus specifically states that.
Significantly, the depositors ("Authorized Participants") have the alternative of using the Ishares (GLD) as collateral for setting up a spread at the COMEX, by selling Gold futures short against the Ishares they hold.
1) Wall Street institutions ("Authorized Participants") can use Ishares (GLD) as collateral for selling Gold futures.
2) Wall Street institutions can borrow Ishares (GLD) from any margin account.
This leads to interesting questions:
If a large portion of the 1,110 tons of GLD Ishares outstanding had been borrowed and used to sell gold futures, would there be any way to know about it? Are there any published statistics which would capture these borrowed shares?
How much of the 1050 tons of COMEX gold open interest is backed by borrowed GLD Ishares?