Friday, August 15, 2008
This is strange. It's been eight business days and $100 lower for the price of gold bullion but still no inventory reduction at the SPDR Gold Shares ETF (NYSEArca:GLD).
It's clear to see all the prior occasions over the last year when a big drop in price occurred around the same time as a big reduction in inventory, late July and early August are good examples.
The two have always gone together up until just the last two weeks - apparently, holders of GLD haven't been net sellers lately.
As a result of lower prices and stable inventory, the inventory-to-gold price ratio shown below hit another new all-time high today at 0.84.
One possibility is that most of the wild-eyed hedge fund managers have already liquidated their positions in GLD to buy financial stocks (or is it biotech this week?), and now, what's left are ordinary Joes like you and me.
The GLD ETF may start to serve as a useful proxy for investment demand.