Gold Market Update

In August 2016 GLD reported a high outflow of gold from its vaults:

source: Simple Digressions

As the chart shows, as many as 477.8 thousand ounces of gold went out of GLD. It was a similar amount to that reported in April, when 486.8 thousand ounces left GLD.

Now, a distinct difference. In April, although gold was leaving GLD, GLD price went up. In August, a drop in GLD price was accompanied by an outflow of gold.

Now, let me present another chart. This time it shows the weekly in / out flows:

source: Simple Digressions

Note that in July and August, every time there was an outflow of gold (bars marked in red) next week the price of GLD stayed relatively unchanged. 

However, most recently red bars are followed by a weakness in gold (and GLD) prices.  

This situation is still intact. Last week there was another substantial outflow of gold from GLD (601.1 thousand ounces).

Now, a small sign of an incoming change. The last-week large outflow of gold was not followed by lower GLD price, which may be an indication of a renewed upward trend.

This thesis is supported by the following two technical charts.

The first one shows the golddollar index:

source: www.stockcharts.com

Most recently this index diverged from its gold equivalent (look at red lines). Such divergences occur when the trend (short, medium or long-term) is going to reverse.

Another chart shows the well - known silver to gold ratio. To remind my readers, during a bull market in gold it is silver that is stronger than gold. The chart shows that this relationship has been trending up since early March 2016. It looks like a few days ago we started another leg up in the current bull market cycle:

source: www.stockcharts.com