jpmorgan's eligible gold plummets 65% in 1 day, page-2

"... in just the past four days, COMEX gold inventory declined by 10%. Since the start of February inventories are down by more than 25%. That's interesting news to say the least.

There are two types of gold inventory, 'registered' and 'eligible'. Registered gold is available for delivery to the owner of a futures contract. Eligible gold is gold held by the bullions banks on behalf of clients for safekeeping.

Both levels are in decline. As of 24 April, there were 2.174 million ounces of registered gold and 5.817 million ounces of eligible gold. But eligible gold inventories have taken the brunt of the falls, suggesting clients no longer see the western bullions banks as safe guardians of their gold. Notably, JP Morgan's vault of eligible gold is nearly empty, with just 141,500 ounces left.

Meanwhile, over at GLD, the world's largest gold ETF, you're seeing inventories fall too. Since the start of April, the trust has offloaded 127 tonnes of gold. The consensus view is that as the price falls, investors sell and gold leaves the trust.

But that's not how it works. Investors sell shares in the trust, not the gold itself. Only 'Authorised Participants' (the bullion banks) can take gold from the trust, by redeeming baskets of shares.

Given the huge demand for physical gold recently, it is perhaps not surprising that bullion banks are using GLD inventory to augment supply. 127 tonnes of physical in a few weeks is huge. Where is it all going?"

The full read "Gold Demand: The Great Disconnect Between Paper and Bullion" by Greg Canavan is at http://www.dailyreckoning.com.au/gold-demand-the-great-disconnect-between-paper-and-bullion/2013/04/26/

My comment:
Did you note what Greg Canavan said about how gold being held by the GLD ETF is being used?