Is Money Flowing In or Out of Gold?
Money flowing to gold
Gold has seen a YTD (year-to-date) gain of almost 8.6% through February 23, 2017. Silver, platinum, and palladium have also followed the same route and have risen 13.5%, 11.7%, and 13.2%, respectively. The increase in these precious metals was most likely due to widespread uncertainty in the market.
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Fluctuations in precious metals are reflected by the funds flowing in and out of the SPDR Gold Shares ETF (GLD) and the iShares Silver Trust ETF (SLV). Until the beginning of January, as shown in the chart above, GLD had witnessed outflows.
GLD also reported an outflow of 2.4 tonnes on Friday, February 24—the first outflow in nearly four weeks for gold. Speculators cut their net long positions in COMEX gold for the first time in three weeks.
Mining shares lost
Precious metals mining shares have seen price falls in the past week. This decline was likely due to the drop in the price of gold, despite the other three precious metals maintaining their buoyancy.
Coeur Mining (CDE), Yamana Gold (AUY), Randgold Resources (GOLD), and Cia De Minas Buenaventura (BVN) stocks have seen five-day trailing losses. These four miners comprise ~12.9% of the VanEck Vectors Gold Miners ETF (GDX).
The sentiment toward the precious metal market is less related to its fundamentals and more often coincides with the performance of the overall economy. However, equity markets play significant roles in determining the direction that precious metals can take.