Breakout

Gold ETFs Are Liquidating By the Ton

Breakout

An ounce of gold, often represented by a single American Eagle coin, is a fairly easy thing to visualize. Even a 400 ounce gold bar, like the ones held at Fort Knox, is a fairly fathomable concept. But when you try to get your head around just how much of the metal an ETF like the SPRD Gold Shares (GLD) owns, it can get a little daunting. And the same is true when you try to track how much they've had to sell as the price of gold slips to a 2-1/2 year low.

"300 tons," says Tom Lydon, the editor of ETF Trends, in the attached video, calling the disposal of over 600,000 pounds of gold so far this year "amazing" and "incredible."

This, of course, as the largest metal-tracking fund has gone from briefly being the biggest ETF, to being a top-5 player after being cut in half to approximately $46 billion in value today, holding just over 1,000 tons of gold in its vaults.

While gold is clearly out of favor forcing the hand of holders to sell into weakness, Lydon says it won't always be that way.

Related: Gold Chart Needs Time to Rebuild, Says Yamada

"Central banks maybe aren't as concerned," he lists as one reason why gold is down. "I think the average investor, with stocks and bonds doing so well, I think they say, 'hey, I don't need to hedge, so that gold position I had, I'm going to put that into stocks for now.'"

It's a reality, a trend, a self-perpetuating sell-off that seems to have no bottom in sight, as the darling of last decade turns into the dog of 2013.

"It's been tough enough to beat the S&P this year, and if you've had money in gold, that has hurt you," Lydon says.

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