Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Pre-COVID US Economy Wasn’t All That Great Either - 4th Dec 20
Bitcoin Breath Taking Surge - Crypto Trading Event - 4th Dec 20
Platinum Begins A New Rally – Gold & Silver Will Follow - 4th Dec 20
Don't Let the Silver (and Gold) Bull Shake You Off! - 4th Dec 20
Stronger Risk Appetite Sends Gold below $1,800 - 4th Dec 20
A new “miracle compound” is set to take over the biotech market - 4th Dec 20
Eiro-group Review –The power of trading education - 4th Dec 20
Early Investors set to win big as FDA fast-tracks this ancient medicine - 3rd Dec 20
New PC System Switch On, Where's Windows 10 Licence Key? Overclockers UK OEM Review (5) - 3rd Dec 20
Poundland Budget Christmas Decorations Shopping 2020 to Beat the Corona Economic Depression - 3rd Dec 20
What is the right type of insurance for you, and how do you find it? - 3rd Dec 20
What Are the 3 Stocks That Will Benefit from Covid-19? - 3rd Dec 20
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold GLD ETF Continues to Astound

Commodities / Gold and Silver 2016 Feb 23, 2016 - 07:48 AM GMT

By: Dan_Norcini

Commodities

I can think of no better word except, "astounding", when considering what is taking place with the giant gold ETF, GLD and its reported holdings increases.

This afternoon's reported gold holdings showed an increase of exactly 19.33 tons to 752.29 tons. This is identical to the increase seen last Friday ( 19.33 tons). In two days time, we have seen almost 39 tons of gold added to the vaults of GLD. I am hard pressed to find anything similar in its past.


Gold Price and GLD Holdings Chart

That this occurred on a day in which gold prices moved lower is even more interesting. The exact mechanism whereby the ETF adds or subtracts from its holdings is a bit more complex than exact mirroring of the moves in the price of the metal itself so what I am more interested in is the TREND.

That trend is moving higher and moving higher at a remarkable pace. Clearly there are Western-based investors who are interested in getting exposure to gold in this current global economic environment. We do not necessarily need to know "WHY" they are doing so; all we need to know is that they are.

As long as this demand continues, gold is going to stay well supported in price.

John Brimelow's "Gold Jottings" has noted the sharp fall in premiums for Indian gold sales which is noteworthy. I believe the two of us share the same conclusion that this is a result of "sticker shock" coming on the heels of a near $200 increase in price in some four week's time ( John also notes the weakening Rupee). India's dealers are very price sensitive which is the reason that I believe this "pause" in the gold rally is both needed and constructive.

Gold buyers in India normally do not chase price higher. They like to buy on weakness in price. However, they also understand the pattern of Western-based buyers during gold price rallies well enough that these rallies do tend to experience periods in which price sets back and consolidates. Indian buyers watch these movements closely. If they become of the opinion that price is STABILIZING at a higher level, they will begin to buy more aggressively. The reason - if they think prices are not going to set back significantly, they will then commit to purchases. They are all too well aware of the bouts of long liquidation which cause sharp falls in the price of gold. For these savvy buyers of the actual metal, they watch to see if that sort of thing will take place. AFter all, why buy now if they have a chance to buy more at a lower price!

This is why we watch to see how gold acts after a rally of this magnitude. If it does indeed garner buying support here in the West and that buying reinforces downside price support levels, then the Indian buyers will realize that the downside is limited and will step in. This will reinforce the downside in price for gold as you then get a combination of speculative buying at the COMEX futures at chart support levels alongside of physical buying in the Asian marketplace. That helps cement a floor at a higher price level in the metal.

By the way, this is what has been missing for gold rallies beginning several years ago when gold was trapped in a vicious bear market. Now we want to see this sort of thing continue as it allows for a move higher, followed by a period of consolidation which allows Indian buyers time to become acclimated to the higher gold price, followed by a steady move higher in the price.

I am not predicting that this is what is going to happen. What i am saying is that is the pattern that is necessary to sustain a gold rally. It is what happened in the past when gold was in a trend higher. If we get this developing, that will be a very positive sign for the metal's future prospects.

Dan Norcini

http://traderdan.com

Dan Norcini is a professional off-the-floor commodities trader bringing more than 25 years experience in the markets to provide a trader's insight and commentary on the day's price action. His editorial contributions and supporting technical analysis charts cover a broad range of tradable entities including the precious metals and foreign exchange markets as well as the broader commodity world including the grain and livestock markets. He is a frequent contributor to both Reuters and Dow Jones as a market analyst for the livestock sector and can be on occasion be found as a source in the Wall Street Journal's commodities section. Trader Dan has also been a regular contributor in the past at Jim Sinclair's JS Mineset and King News World as well as may other Precious Metals oriented websites.

Copyright © 2016 Dan Norcini - All Rights Reserved

All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. The information on this site has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any information on this site without obtaining specific advice from their financial advisor. Past performance is no guarantee of future results.

Dan Norcini Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules