Quote from: waveaddict on May 10, 2013, 07:11:07 PM

I always found the Sprott physical silver and gold trust premium/discount percentage to be a good indicator for whether these conspiracy theories have any merit. A higher premium trend would make me possibly believe in them. However, since last year, the premium has virtually disappeared between physical and paper. Remember, the market will almost always warn of an imminent problem if there was one.

No matter how well managed a fund is, it is no substitute for physical held in direct ownership. When all paper is in question, there is no third party audit that will perform to satisfaction. The largest independent entities are entirely capable of storing their own gold in quantity. Smaller investors would have greater relative exposure to funds.

Physical metal held in the GLD fund began decreasing at the beginning of 2013 and the decline accelerated starting in April. Almost a quarter of the tonnage in the fund has been removed, leaving the paper price vulnerable. There remains a question of where that metal is moving. Sprott's gold trust has not seen a decline in ounces held.

Note that the premium for GLD has also gone to zero, if not negative. It is not the premium on paper that will wooden, only that of physical. GLD also experienced the 2nd biggest trading volume, the first being in March 2010 which occurred at a major low before price rose again.

The most pertinent question is that asking where the gold being removed from GLD is going. There is a buyer on the other end, or it is being redeemed through physical delivery.

What is being seen in the daily volatility of currencies and commodities is the strain of paper vs physical. The undercurrent of physical acquisition is accelerating, and rapidly making paper irrelevant.

Keep this in mind: gold is as anonymous as cash and Bitcoin. Holding metal where it must be reported defeats that purpose. Smart money is exiting as many reporting requirements as possible, and the result once that window closes will be phenomenal revaluation, potentially in multiple stages.