Gold bullion holdings in the world's more than 140 gold-backed ETFs hit a record 2,632 tonnes or 93 million ounces in December 2012.
During the first seven months of this year outflows totalled some 670 tonnes with more than 400 tonnes recorded in the second quarter following the spectacular collapse in the price of gold.
After burning a $60 billion hole in gold investors pockets, only in August did the selling stop.
Investment bank Macquarie explains in a research note where all that gold has gone adding that ETF gold should be considered as part of the physical market.
The bank's research tracks the flow from West to East, specifically from the UK, where most of the world's gold vaults are to be found, to Switzerland where the globe's gold refineries are concentrated and then onto China and India:
- The UK exported just under 800 tonnes of gold to Switzerland during the first six months of the year. That compares to 92 tonne during the whole of 2012.
- The UK produces no gold of its own, but there was a good correlation, taking into account a one-month lead time, of outflows from ETFs and the country's gold exports to Switzerland where Macquarie says it is remelted into different size bars and coins.
- Hong Kong customs reported imports of gold from Switzerland of 370 tonnes in the first half of 2013, a more than fourfold increase from the corresponding period in 2012, while Indian imports rose by more than 100 tonnes year on year.
The Chinese are also willing to pay more for gold than investors in the West as evidenced by premiums on the Shanghai Gold Exchange.
From zero in October 2012, premiums reached $10 an ounce before April's gold price plunge and then shot up to more than $20.
Gold's second gap down in late June to below $1,200 following Bernanke's comments about QE saw Shanghai premiums top out at $37. The week the premium was down to $16.