Longtime readers will recall that we've been covering the ongoing depletion of the GLD since early 2013. After today's massive withdrawal, the total alleged "inventory" of the GLD now stands at a multi-year low of just 751.96 metric tonnes and down 5.8% on the year. This while the paper price of gold is actually up on the year by nearly 4%.

In case you're new to this site and need a refresher, here are just a few of the articles we've posted in the past:

http://www.tfmetalsreport.com/blog/4517/raiding-gld

http://www.tfmetalsreport.com/blog/4633/enencumbered-gold

http://www.tfmetalsreport.com/blog/4684/bear-market-gold

http://www.tfmetalsreport.com/blog/5167/pillaging-gld

http://www.tfmetalsreport.com/blog/5505/gld-two-step

The alleged "inventory" of the GLD began 2013 at 1,349.92 metric tonnes of "gold". Over the course of the year, while paper price declined from $1650 to $1200 or 27%, the "inventory" of the GLD declined to 798.22 mts or about 41%.

So far this year, even though paper price has recovered and, at times, has been up as much as 16%, the plundering of the GLD "inventory" has continued. Just today, the GLD registered a massive withdrawal of 8.97 metric tonnes or about 288,000 troy ounces of "gold". Each pallet you see below holds 192 London Bars for a total of 76,800 ounces making today's GLD withdrawal equivalent to:

As Ruprecht would say, "that's a lot". Especially considering that the paper price has rallied smartly over the past 11 sessions from a Sunday 10/5 low of $1182 to today's Comex close of $1246. That's 5.5% in just eleven trading days but still the GLD "inventory" declines...

For the year, the paper price of gold is now up almost exactly 4%. However, for the year, the "inventory" of the GLD is now down 5.8%. As mentioned above, "inventory" began the year at 798.22 mts and it stands tonight at 751.96 mts. That's a drop of 46.26 mts or almost 1.5MM troy ounces. That's about 19 pallets!

That's more than "a lot" and certainly curious given the performance YTD and just this past week.

What in the world is going on here? Several really smart people contend that there's some sort of arbitrage happening. That for a mere $10/ounce profit (allegedly after storage, transport, insurance and other costs), there are industrious folks out there who cash in shares of the GLD in order to ship it to China. Hmmm. Maybe.

But I would offer an alternate explanation. Notice that the "inventory" keeps falling, regardless of the overall direction of paper price. Could, instead, the "inventory" of the GLD be being raided as a last ditch supply depot to satisfy Chinese demand? Just today, our pal Koos Jansen reported that total Chinese wholesale demand YTD is nearing 1,500 metric tonnes and this doesn't even include PBOC demand. (https://www.bullionstar.com/article/the%20chinese%20precious%20metals%20market%20is%20on%20fire). Only about 1/3 of the total Chinese demand is satisfied by domestic mining and recycling so the other 1,000 metric tonnes YTD has to come from somewhere...

We'll continue to watch these "inventory" changes to the GLD and we'll be sure to keep you updated with further developments. In the meantime, always remember the words of Bloomberg Industries' Ken Hoffman:

"The London gold is gone...all 26MM ounces of it. It used to be that you could walk through the vaults and gold was stacked to the rafters. But now that gold is gone and The Big Story for 2014 is that should western investment demand for gold return, from where will that gold come?"

Indeed, Ken. Indeed. From where will it come?...

TF

http://www.tfmetalsreport.com/