^ Ismene is right. I wouldn't say it's "made up" as such, but it's just a theory of his and everyone took it to be fact, even when he himself said he only suspected DMT was produced in the pineal gland. Basically, the reason he thought this was due to it having a similar structure to melatonin, which is produced there.
It's possible that is it produced there, but unlikely that it is or there would probably have been some solid evidence to prove it by now. Even what he said about DMT being present in the human bloodstream is a little shaky since at least some of his "test subjects" were already DMT users and it's possible trace amounts remain in the bloodstream for a long time after use.