ETPs

Gold and silver often see periods of weakness in the summer doldrum months of May, June and July.
Gold, heading for the biggest slump in three decades, reached the lowest price since June as an improving economy cut demand for wealth protection. Silver prices touched the lowest in more than four months.
Gold, heading for the biggest slump in three decades, reached the lowest price since June as an improving economy cut demand for wealth protection. Silver prices touched the lowest in more than four months.
Commodity investments are heading for record outflows driven by withdrawals from gold exchange-traded funds as some investors lost faith in the traditional store of value, according to Barclays Plc.
Top gold news over the weekend was from Zimbabwe that President Mugabe plans to ban the private sale of gold. Producers will be required to sell any mined gold through a state-owned company. This latest measure will not come as a shock to anyone who has followed the troubled nation’s economic progress.
Investors are dumping gold-backed exchange-traded products at the fastest pace since the securities were created a decade ago, mirroring the steepest price drop in 32 years.
It is unknown where the gold would come from to replenish these ETF holdings were there a sudden surge in demand in the West in the event of a new sovereign debt crisis or a Lehman Brothers style contagion event.
Alas, the basic mechanism of price discovery of anything traded on an exchange has been terminally infected by speculators having access to unlimited funds and super fast computers for trading.
The physical outflows from gold Exchange Traded Products (ETPs) totaled $4.17 billion in the third quarter, declining sharply from the Q2 outflows of $18.54 billion. The gold ETP outflows have fallen by 78% over the quarter.
The gold-backed ETP holdings appear to have stabilized at 1,986 metric tons although the holdings have dropped 646 metric tons this year. The ETP holdings rose 275 metric tons last year.