GLD trust gold inflow?

Looks like the media is telling us that the GLD trust physical gold holdings are rising and giving a boost to the precious metals prices.

I don't believe it until I see it.

When I make the chart, I see that we are bottoming out (red chart), but by no means we are really seeing a pick up in GLD trust physical gold holdings yet. We will have to wait for a longer time frame to confirm this uptrend.

I need to admit that the red chart is bottoming out though. Maybe the selling of the GLD trust units has exhausted itself.

Chart 1: GLD Trust

As for silver, we really start to see an uptrend here:

Chart 2: SLV Trust

Conclusion:
Silver is the most undervalued of the two precious metals.

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Correlation: Monitoring the GLD Trust ETF to Predict Gold Prices Based on Demand

As demand is now being dictated for a part by the ETF's, we need to pay attention to what is happening in the trusts. Are they unloading their gold? Because if they keep unloading their gold, the demand from ETF's is going to decline, which has a negative impact on the gold price. This is the theory of supply and demand.

You can monitor this chart daily at the SPDR gold trust site:
http://www.spdrgoldshares.com/usa/historical-data/

Chart 1: GLD Trust: Units in the trust (tonnes)

As I indicated here, ETF's were the largest sellers in gold, resulting in a 13% decline in the demand for gold. I cannot stress how important it is that ETF's keep buying gold. If they don't buy, like what happened starting in 2013, then the price of gold will decline. The great difference between 2013 and 2008 is that in 2008, ETF's were massive buyers of gold, while today they are massive sellers. Keep watching this trend. If it reverses, you can confidently start buying precious metals

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ECB's LTRO I and LTRO II didn't work

On Zerohedge, the article of the ECB deposit facility sparked my attention. Apparently, banks are depositing their money into the ECB at an alarming rate (Chart 1).

Since the crisis of 2008, this deposit facility had risen a lot (250 billion euro), but has only recently skyrocketed to more than 800 billion euro.

This deposit facility at the ECB is a macro-economic indicator of market tension residing at the European banks. It is seen as a "safe haven" during economic turmoil in Europe. The higher this ECB deposit facility rises, the more banks favour the safety of the ECB deposit over higher returns in the interbank market. It shows that banks aren't lending to each other and also shows that appetite for European government bonds is declining.

Even though banks borrowed 489 billion euro (LTRO I) and 529.5 billion euros (LTRO II) in loans (at 1% lending rate) from the ECB, a lot of that money just went back into the ECB deposit facility at 0.25%. This means that banks are actually opting to lose money due to fear of a eurozone break-up.

To read the full analysis on this matter go to: The European Central Bank's LTRO Isn't Working Out.

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