Gold breaking out

[mtzianos]

Quote from tomcole:

ts interesting to note if this is simply a limited occurence or the beginning of a tide change. If GLD dumps 100 tons into the market, it is very disruptive.

Plus all the gold trading volume you talk about, is mostly inter-dealer trading, not real bonafide retail buying.

Sure. And if SPY/QQQQ/etc ETFs would dump 60% of their holdings, it'd also be "very disruptive"

If I had to guess, I'd have the following theories:

Some people decided to put e.g. 5%-10% of their liquid assets in gold. They may take some profits as price rises, to maintain a fixed exposure to gold as % of assets.

The recent rise has been quite steep, and traders who try to time the market via GLD decided to take profits at the $445 number (which has a lot of options bets), if they think it will be strongly defended by the powers that be.

 

[illiquid]

Not too familiar with the gold ETF -- is the GLD sale based on something like lower "open interest" on the shares?

 

[mtzianos]

Quote from illiquid:

Not too familiar with the gold ETF -- is the GLD sale based on something like lower "open interest" on the shares?

No rocket-science required to calculate gold tonnage for GLD. They publish it EOD everyday at their website. Including historical data (how many tons of gold on X day).

Infact, they also provide the numbers of the gold bars held by the fund. Apparently there was a lot of fuss initially about this. I guess physical gold investors have become very mistrusting after all those years of blatant, screaming manipulation by the powers that be.

Remember that, adjusted for inflation, gold is still priced at 1/5th of its peak price in 1980, 25 years ago. In nominal dollars, it's still trading at 50% of its peak price.