by Lawrence Williams, MineWeb.com
Arguably, the decline in the gold price over the past two years has been exacerbated by sales out of the gold ETFs, and particularly out of the SPDR gold ETF, GLD, where 551 tonnes of gold were offloaded last year (with other ETF holdings shedding a further 200 tonnes or more), following on from a little under 100 tonnes in 2012. There are signs this year that this may be turning around with no sales out of GLD over three of the past four weeks – indeed overall there have been limited gold purchases which have cumulatively exceeded the outflow seen in the one week which saw this. While it is too early still to say whether this is an ongoing trend, if sales do resume they are virtually certain to be at a significantly lower level than last year. In the kind of shakeout seen in GLD, those who have been retaining their holdings are likely the strongest holders who are there for the long term and we are likely to see a sharp reduction in sales regardless of the gold price pattern which emerges.
Thomson Reuters GFMS’ latest published research considers the sales out of the ETFs last year the primary cause of the big drop in the gold price over the period. But with GLD now holding only 797 tonnes (around 3 tonnes higher than at the beginning of the year) the scope for massive sales out of the ETF again this year is thus hugely reduced.
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