Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Gold Pushes Higher, GLD Holdings Surge

Published 07/06/2016, 06:02 AM
Updated 07/09/2023, 06:31 AM

Safe haven gold continues its strong showing as plummeting interest rates and shaky global equity markets are creating a strong bid in this market. Gold pushed up toward last week’s high and in the process pushed through yet another overhead resistance level in the $1345-$1350 area.

Based on what I can see from this chart, there appears to be little resistance in its path until closer to the $1385 level. Above that lies the psychologically significant $1400.

Gold Weekly 2012-2016Gold Daily

The real kicker yesterday, however, was the massive surge in reported SPDR Gold Shares ETF (NYSE:GLD) holdings. A whopping 28.8 tons of gold were reportedly added to GLD. I have not gone back to check my database but I suspect this might be very close to a record one day total or if not, a new record in itself. Gold holdings are now at 982.7 tons, the highest level since June 2013.

Gold Holdings vs Gold Price 2008-2016

This is absolutely phenomenal demand. In my view, this is all traceable to the collapse in interest rates. The yield curve is growing flatter and has broken to yet another new low.

10-Y/2-Y Treasury Spead 2010-2016

Simply put: there is no opportunity cost in owning gold at this time nor is there any particular reason to be aggressively selling the metal. This is in spite of the record-high fund long exposure.

COT: Gold Futures And Options Combined 2006-2016

Hedge Fund Longs and Shorts vs Gold Price 2011-2016

Merchant And Swap Dealer Positions vs Gold Price 2011-2016

These numbers are already outdated as it has been a full week now since the COT data graphed above was reported. There is no doubt in my mind that the hedge funds have piled on even more longs. And why should they not, given the environment?

Latest comments

"SPDR Gold Shares ETF (NYSE:GLD) holdings.". . I frequently see you reference this questionable data but how reliable are GLD's holding reports? GLD does not give retail investors the right to redeem for any of its mystery physical gold holdings. This fact alone ensures the GLD shares to be nothing more than paper at the end of the day. GLD also has a glaring audit loophole in their prospectus that states they have no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this backdoor to the fund.. . I also remember there was a highly publicized visit by CNBC's Bob Pisani to GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this "GLD" bar was actually owned by ETF Securities.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.