Financial Times/Henry Sanderson/11-24-2016
“A declining gold market faces a major challenge as a $3.8bn outflow from exchange traded funds over the past 10 days is seen intensifying the liquidation of holdings by investors “
MK note: When you consider that the ETFs added $60 billion earlier in the year (as this same article states), the $3.8 billion outflow does not seem to be all that damaging. Use of the word, “steamroller,” seems a bit overdone. The damage to gold price over the past few weeks has little to do with ETF flows and much to do with the London and New York paper gold markets – positions that could be reversed as quickly as they were put on (and with the slightest provocation). Also, instead of “intensifying the liquidation of holdings by investors,” a declining gold market could just as easily generate increases in the holdings of investors – especially in India and China. Recent history comes down more in favor of that outcome than the one assumed in this article.
