There’s a big seller out there

I showed these charts in a recent edition of AtlasPulse.com. I’m showing them again because they help you to understand why precious metals aren’t rallying as hard as they should.

This chart shows the link between the total speculative flows and the price of gold. Normally they follow closely but recently, the speculators have gone nuts – increasing their positions by nearly 70% while the gold price has risen by less than 20%. That means the market isn’t tight and so there has been ample supply to match investor demand.

Price struggling to match flows

gold and flows

Gold ($) and investor interest (milion ounces)

The next chart shows the price divided by the investor flows. If it is rising, the market is tight and investors control the price – whether it be up or down. When this line rises in a rising market, the impact on price is explosive as was the case after the crisis.

Slumping impact

gold flow

Gold ($) relative to investor interest (milion ounces)

And for silver…

The situation is even worse in silver. Investors have thrown money at silver as the price collapsed from $48 to $13. They still do and the rally to $17 is paltry when compared to their flows. It seems likely that the  miners have plenty of capacity or inventory or both. If they had less, the response by the market would have been explosive – but it wasn’t.

Record interest in silver

silver and flows

Silver ($) and investor interest (milion ounces)

The darker line (chart above) shows total investor positioning. It’s huge and never been bigger. The longs in the futures market are at an all time high. The ETFs are close. All this and silver hits resistance at $17. I’d have expected more.

This last chart brings the point home. Investors throw money at silver yet the price fails to respond. It was  flat from 2008 to 2009 and then took off until 2011. That tight market saw the price roar. Since then, it hasn’t. I blame the miners and the solar panels.

The silver price lags flows – the market need to tighten

silver flow

Gold ($) relative to investor interest (milion ounces)

Link to this article: : http://www.goldmadesimplenews.com/gold/theres-a-big-seller-out-there-12844/

Posted by on Apr 25 2016. Filed under Analysis, Gold and Silver Media, Gold News, Markets, Silver News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

Leave a Reply

The Atlas Pulse Report