| What Does Money Managers’ Positioning Tell You about Gold Prices? | |
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The Gold Price Outlook: What Investors Need to Know (Continued from Prior Part) Precious metals ETF holdings
ETFs form a significant portion of overall gold investment demand. Outflows from ETFs led to a ~28% fall in gold prices in 2013. That’s the equivalent of selling 881 tons of gold. For this reason, investors should track any sustained or significant buying or selling activities by these ETFs.
Gold ETF holdings at a multi-year low
As of November 25, known gold holdings equaled 1,493.5 tons. This is the lowest level since February 2009. They’ve declined by 11% since the peak holdings in February 2015, and 3.2% of that decline came in within the last month. According to a World Gold Council (or WGC) 3Q15 report, gold ETF holdings have fallen 4% sequentially in 3Q15. Holdings in the SPDR Gold Shares ETF (GLD) fell 3%, while the iShares Gold trust fell 4%. GLD is the world’s largest ETF, and it accounts for ~40% of the total ETFs traded. Silver-based ETFs such as the iShares Silver Trust (SLV) have also seen significant falls in their prices.
Money managers cut long positions
According to the latest Commitment of Traders (or COT) report, the non-commercials—money managers—cut their net long positions in gold for the fourth straight week through November 17. The expectation regarding a Fed rate hike is leading hedge funds to increase their bearish bets on the metal. This is in line with increasing long positions in the US dollar. The USD has been near the most net long it has been since April 2015.
Please read Position of Gold Futures: Is a Gold Price Rebound Near? to learn more about the COT report.
Implications for investors
Because ETFs are large holders of physical gold and silver, and since the market tends to follow money managers, the recent bearish sentiment might be a further short-term negative for gold prices. As a result, it might negatively affect precious metal prices and stocks like Sibanye Gold (SBGL), B2Gold (BTG), Hecla Mining (HL), and Silver Wheaton (SLW). It’s also negative for the Market Vectors Gold Miners ETF (GDX). Silver Wheaton accounts for 4.80% of GDX’s holdings.
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Silver Wheaton
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PRODUCER |
CODE : SLW.TO |
ISIN : CA8283361076 |
CUSIP : 828336107 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Silver Wheaton is based in Canada. Silver Wheaton produces silver, copper, gold, lead, silica and zinc in Canada, in Greece, in Mexico, in Peru, in Portugal and in Sweden, develops copper, gold, silver and zinc in Canada and in Chile, and holds various exploration projects in Argentina and in Portugal. Its main assets in production are ZINKGRUVAN in Sweden, KENO HILL (BELLEKENO) and MINTO MINE in Canada, SAN MARTIN - LUISMIN, PEÑASQUITO, LUISMIN and G-9 CAMPO MORADO in Mexico, YAULIYACU in Peru, STRATONI in Greece and NEVES-CORVO in Portugal, its main assets in development are PASCUA LAMA in Chile and KUTCHO CREEK in Canada and its main exploration properties are PROMOTORIO DURANGO and MONTOROS in Mexico, ALJUSTREL in Portugal and LOMA DE LA PLATA (NAVIDAD) in Argentina. Silver Wheaton is listed in Canada, in Germany and in United States of America. Its market capitalisation is CA$ 12.6 billions as of today (US$ 9.2 billions, € 8.4 billions). Its stock quote reached its lowest recent point on March 09, 2007 at CA$ 10.01, and its highest recent level on May 15, 2017 at CA$ 28.53. Silver Wheaton has 441 520 000 shares outstanding. |