Did you even know that you could take physical delivery from GLD? Apparently many didn't. I was just chatting (online) with one of my supporters yesterday, let's call him "Small Giant" (a term explained in my last post) because he is in that eight figure savings bracket that might find this information useful. On top of that, he makes his living assisting funds in their management of eleven figures.
So he says to me:
Small Giant [6:10 P.M.]: I think very very few people realize that you can convert GLD shares to actual physical Small Giant [6:10 P.M.]: can't say I know of anyone who has ever done that
Okay, let me back up.
Small Giant [5:47 P.M.]: there is clearly panic in the ranks of the longs FOFOA [5:47 P.M.]: The more it goes down, the bigger the pressure on physical. I think the draw down in GLD suggests other options for physical delivery in size are gone. Small Giant [5:47 P.M.]: I agree FOFOA [5:49 P.M.]: With $13 million, you could take possession of a basket of physical from GLD at a good price. Small Giant [5:49 P.M.]: what is the minimum threshold? FOFOA [5:50 P.M.]: 100,000 shares is a basket. Must be redeemed through an "Authorized Participant"... Small Giant [5:50 P.M.]: wow this is getting very very interesting FOFOA [5:50 P.M.]: Authorized Participants are: BMO Capital Markets Corp., CIBC World Markets Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., EWT, LLC, Goldman, Sachs & Co., Goldman Sachs Execution & Clearing, L.P., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc., Merrill Lynch Professional Clearing Corp., Morgan Stanley & Co. Incorporated, Newedge USA LLC, RBC Capital Markets Corporation, Scotia Capital (USA) Inc., and UBS Securities LLC Small Giant [5:51 P.M.]: so how would that work? Small Giant [5:51 P.M.]: you buy 100K shares of GLD Small Giant [5:51 P.M.]: then what? FOFOA [5:53 P.M.]: You've got to go to one of those APs and have them create a basket for you. That gold is then transferred from the GLD allocated account into your broker's unallocated account. Then you redeem your basket and have your broker allocate the gold to you. Small Giant [5:54 P.M.]: so it's really is that easy? FOFOA [5:55 P.M.]: I'm working on a post tentatively called "Who is Draining GLD" using a lot of snips from the prospectus. The entire world of confused financial analysts is misinterpreting the GLD inventory reduction as if it is gold negative. But it is precisely the opposite. GLD doesn't buy gold when it's going up and sell when it's going down. Doesn't work that way. But that's what everyone thinks. FOFOA [5:57 P.M.]: GLD might be the last reservoir for the giants to drink from. That's my Thought of the day. Because there should be easier ways to buy a tonne of gold. Small Giant [5:58 P.M.]: u lost me Small Giant [5:59 P.M.]: count me as a confused financial analyst
So after this chat I started thinking that I should write this post for other "small giants" out there that might be looking for tonnes of physical at a good, off-market price.