Tuesday, December 11th, 2018 MST

Hamilton discusses gold ETFs’ impact on price of gold

I noted the correlation between gold ETFs buying or selling gold and the price of gold In my January 10, 2018 post ETFs, central banks buy gold in 2017; sign of higher prices?. The correlation is eerie.  Now, Adam Hamilton, a longtime prolific contributor to Gold-Eagle.com, has written a valuable article, Radical Gold Underinvestment, about the same correlation.
 
The piece is lengthy but well worth the time to read it if you are a serious gold/silver investor.  In fact, I would suggest reading it twice for better comprehension.
 
In 2016, gold ETFs (Exchange Trade Funds) uploaded almost as much gold as they did in 2009.  Of course, 2009 was followed by a huge run-up in the price of gold.  Does the 2016 buying portend higher gold prices as it did in the years following the 2009 buying?  Making this possible scenario look even better is that in 2017 ETFs continued to buy gold, albeit at a much slower pace.  Also to remember is that gold is up $270 from its December 2015 bottom, which suggests that the secular gold bull market that started in 2000 is moving up again.


 
Note also in the graph that in 2013 gold ETFs unloaded massive quantities of gold, which was followed by a gold down-turn that bottomed in December 2015, further evidencing that significant gold moves in and out of ETFs indicates the direction in which gold prices will move.
 
Reading Hamilton’s Radical Gold Underinvestment will help you more fully grasp the relationship between gold ETF buying and selling and the price of gold.

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