Gold ETFs Being Shunned During Price Upturn

Everyone wants to be a contrarian, and to go against the crowd.  So the constant quest is to know what the crowd is thinking and doing, so that one can go against it. 

This week’s chart shows the total combined assets held by GLD and IAU, which are the two largest ETFs that are backed by gold bullion.  Normally these asset levels move up and down in step with gold prices.  It gets much more interesting when there is a disagreement, like what we are seeing now.

The pop higher in gold prices has brought zero new interest among investors in expanding their holdings of these ETFs. That is a sign of firmly entrenched bearish sentiment, which is a longer duration bullish message.  Uptrends end when these traders start getting on board, and getting excited.  They are still not yet even thinking about getting on board the bullish train.

We have seen this happen before, when gold prices would turn higher but the total combined assets in GLD and IAU would refuse to turn upward along with prices.  In those cases, what usually would happen was a longer up move in gold prices, an upturn which lasted until “the crowd” finally decided to get on board.  The longer that they hold off from buying into these ETFs, the longer that the uptrend can last.  Uptrends tend to end when the strong hands who started them begin handing over their shares to the weaker hands of “the crowd”, who chase momentum and come storming in at the end.  The crowd in gold ETFs is not doing that yet.

You can track these data yourself at these links:
https://www.ishares.com/us/products/239561/ishares-gold-trust-fund
https://www.spdrgoldshares.com/assets/dynamic/GLD/GLD_US_archive_EN.csv