It’s Official – Goldman Sachs Was Buying GLD While Advicing To Sell

We have expressed earlier this year our suspicion about the aggressive price drop of the metals. Our main point was that the ferocity of the drop was out of proportion.

Moreover, in “Gold In 2013 – Too Many Mysteries Remain Inexplicable” we showed several evolutions in the gold market that defy any normal measure. We did so based on facts and figures only as we remain strongly unbiased in our writings. One of the points we made in the article was the following:

The point is not the sale of the gold as we know it is caused by investor liquidation. The key question is who has been buying these gigantic amounts of physical gold? The gold is not being consumed, so it is in some hands right now. Which ones? We asked the question a couple of weeks ago in this piece, but it seems no clear answer exists at this point.

We remain convinced that the most important question was who has been purchasing the gold in both the physical and paper market. As far as the physical market is concerned, we know meantime that a large part has been bought by central banks in non-G8 countries as well as Asian citizens. But here is the surprise of the day (or maybe no surprise at all), as reported by Zerohedge:

“In Q2, Goldman Sachs added a stunning (and record) 3.7 million ‘shares’ of GLD. As Paulson dumped his GLD, Goldman lapped it up to become the ETF’s 7th largest holder.”

In addition, Zerohedge provided evidence of their finding. The following screenshot shows the GLD purchases in Q2 of this year.

GLD_buyers_Q2_2013

Any other questions about the price smash? Any wonder JP Morgan and Goldman Sachs are breaking every imaginable trading record with almost 100% of profits when measured on a day basis?

The “golden” lesson? Don’t trade gold and keep possession of the metal in physical form outside the banking system.

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