Gold: Two Charts. One For Gold Bears And One For Gold Bulls

The first chart shows the old GLD picture:

Well, it looks terribly now. The amount of gold in GLD vaults is going down sharply and GLD prices broke below their strong support at 115. This is the chart for gold bears.

Now, the chart for gold bulls:

It is a little bit complicated so let me explain.

The upper panel shows gold prices. The lower panel shows the US dollar index. For better comparison, I have plotted an inverted version of the US dollar index.

As a rule, both charts should perform in the same way. If gold goes up the inverted US dollar goes up as well (and the "right" US dollar index goes down).

That is theory. However, it is the divergences that count. The first divergence occurred between March and December 2015 (points A and B). The US dollar index had the same readings at point A and point B but gold had not. Gold was lower - I would say that the gold sentiment was negative : although the US dollar did no change its value gold was weaker. 

Now, look at the point B and C. Most recently the US dollar goes up strongly (and the inverted variant of greenback goes down). The point C is lower than the point B.
However, and that is the argument for gold bugs, now gold at the point C is higher  than at the point B. Generally, it should also be lower but...it is not. I would say that the sentiment among gold players is now positive.