Wednesday, August 13, 2008
The inventory data at the SPDR Gold Shares ETF (NYSEArca:GLD) continues to provide interesting clues as to what's going on in the gold market, the latest development being the ratio of GLD inventory-to-gold price reaching a new all-time high at 0.806.
What's interesting about this?
The old high was September 13th, 2007, about a month after the credit crisis began and just a few days before the first half-point rate cut to the Fed funds rate.
Is this significant in any way?
Dunno. It certainly is an indication of the increasing popularity of the fund that, as indicated by rising ratio, has not shed bullion as quickly as prices have tumbled recently.
As might be expected, the ratio has continued to climb steadily over the years.
From late-2004 when the ETF was launched, the ratio has moved up from about 0.20 (i.e., about 90 tonnes of gold at about $420 per ounce) to an interim peak of 0.66 in March of 2006, two months prior to the May high for the price of gold at $725 per ounce.
The ratio was in the 0.70 to 0.80 range for most of 2007 as shown above, poking above the 0.80 mark on only three days last September. The last two days have seen the ratio rise above this level again, yesterday exceeding the September high.