Even after this year’s selling, there is a lot of gold in ETFs that could be liquidated.
[This article originally appeared on HardAssetsInvestor.com and is republished here with permisison.]
Gold ETF Holdings
One of the themes within the story of this year’s gold plunge is the endless selling by ETFs. Investors in physical gold-backed exchange-traded funds have liquidated close to 19 million troy ounces (590 metric tons) of their holdings since the start of the year.
The liquidation has been steady, relentless and remains ongoing.
The impact that ETF selling has had on the gold market cannot be overstated (see Dennis Gartman: Technicals Say Gold Could Hit $900). In 2012, such funds purchased 9 million troy ounces worth of gold. Thus, this year’s sales of 19 million ounces make for a swing of 28 million ounces, or 870 metric tons—a significant amount in a gold market that saw 4,360 tons of total demand in all of last year.
Currently, even after the recent selling, gold exchange-traded funds still hold more than 65 million ounces, according to Bloomberg. That’s a lot of gold that could potentially be liquidated. Indeed, as recently as 2008, holdings were a mere 30 million ounces, or less than half of current levels.
If another 10 million, 20 million or even 30 million ounces were sold in short order, there’s no telling how low prices could go.