Gold, silver ETFs see strong buying pressure: Got Gold Report

Houston -- At least some investors seemed to welcome last week’s pullback for the two most popular precious metals. How do we know? Well, not just because of what my good friend Thom Calandra who writes Ticker Trax for Stockhouse says. He’s usually on trend and usually right, though, and he’s looking for much higher gold prices over time.

No, it’s because as the metals tested popular moving averages from above both of the largest precious metal exchange traded funds added metal to their holdings. Metal holdings go up for ETFs when more people are buying them than selling them. Both of the largest gold and silver ETFs now report holding record amounts of gold and silver bars for investors. Details and charts are just below.

I understand Thom’s planning a cocktail get-together thingy during the upcoming Vancouver resource confab on January 24. I sure wish I could be there at the Lion’s Pub on Cordova Street at 5:30 pm to hobnob with the mining guys/gals and share a mineral water with Thom, … (mineral water, Thom?) … but dang it all, I’ll have to catch the next one.

Meanwhile, below is an excerpt of the Got Gold Report, a service to subscribers of GoldNewsletter.com.

Gold ETFs

As gold dipped down to test as low as $802.53 in the COMEX dominated spot market, before an impressive $25 Friday rally back up to the $840s, we continued to note stronger buying than selling pressure in gold exchange traded funds.

SPDR Gold Shares, [GLD], the largest gold ETF, reported adding yet another 7.65 tonnes to show 795.25 tonnes of gold bars held for its investors by a custodian in London. As of the Friday clos,e the metal held by the trust was worth $21.3 billion.

That is another record for gold metal holdings by an ETF. For now lower gold prices seem to stimulate more, not less buying of GLD.

Source for data SPDR Gold Trust

So that the price of each share of GLD tracks very closely with the price of 1/10 ounce of gold (less accumulated fees), authorized market participants (AMPs) have to add metal and increase the shares in the trading float when buying pressure strongly outstrips selling pressure. The reverse occurs when selling pressure overwhelms buying pressure.

Barclay’s iShares COMEX Gold Trust [IAU] gold holdings added 0.61 to show 68.13 tonnes of gold held for its investors. As of Friday, 1/16, Gold holdings for the U.K. equivalent to GLD, Gold Bullion Securities, Ltd. added 2.86 tonnes over the past two weeks, to show 119.19 tonnes of gold held.

In the two weeks ending Friday, 1/16, all of the gold ETFs sponsored by the World Gold Council showed a collective addition of 17.84 tonnes to their gold holdings to 953.01 tonnes worth $25.6 billion.

Again, note please that as gold pulled back from the $860s to near $800 there has been more buying pressure than selling pressure for the world’s gold ETFs.

SLV Metal Holdings

As spot silver prices attempted a downward test of the $10.30s over the past week, metal holdings for Barclay’s iShares Silver Trust [SLV], the U.S. silver ETF, reported adding a net 79.79 tonnes to show a new record 7,143.27 tonnes of silver metal held for its investors by custodians in London.

Source for data Barclay’s iShares Silver Trust.

There has been particularly strong buying pressure for the big silver ETF since the beginning of the year. As of Friday, January 16, SLV had added an impressive 350.28 tonnes of new silver to its metal holdings in London.

Clearly there were more investors who wanted more exposure to the price of silver than investors who wanted less in the first half of January, 2009. Part of the reason for that is another big jump in premiums for bullion silver products on the Street, as dealers reported extreme demand for physical silver in all forms mid-week.

Note: January 2009 is as of January 16. Source for data iShares Silver Trust.

Got Gold Report Charts

2-year weekly Gold:HUI ratio

2-year weekly U.S. dollar index

One last comment for today: It is an exciting, but challenging time for precious metals investors. Anyone with a lick of sense now understands that as the global markets took a credit market sucker punch last July; as the full effects of a full-blown panic in the banking and capital markets gripped all investors everywhere September through December, one asset really did step up to prove its “mettle.” That asset, of course, was gold.

I’m convinced a new stealth bull market is getting underway for gold, silver and the companies that produce them. Thanks to the devastating effects of last year’s global stock panic, there are fantastic opportunities to be had for well-informed contrarian investors who have the courage to act.

So long as the world holds it together and doesn’t allow the prophets of doom and chaos to rule us all, we’ve probably just begun the long road back to a more normal investing atmosphere. Keep those carefully chosen trailing stops in place, though. They were and will remain your best friend.

That’s it for this excerpt of the full Got Gold Report. GoldNewsletter.com subscribers enjoy access to all the Got Gold Report technical analysis and commentary as well as Brien Lundin’s timely advice, analysis and specific resource company recommendations.

Until next time, as always, MIND YOUR STOPS.

The above contains opinion and commentary of the author. Each person should study the issues carefully and, as always, make their own informed decisions. Disclosure: The author currently holds a long position in iShares Silver Trust, net long SPDR Gold Shares and holds various long positions in mining and exploration companies.

ABOUT THE AUTHOR

Gene Arensberg

A land developer, professional numismatist, self-taught bullion trader and investor since 1980, Gene Arensberg analyzes technical and fundamental developments in the precious metals markets. In 2000 Gene started sharing his own market research with fellow traders and fund managers. Those email reports evolved into his popular Got Gold Report, a biweekly look at important indicators for gold and silver published on the web.

Gene’s more in-depth market reports, insights and trading ideas are an added service for subscribers of the very popular Gold Newsletter (GNL). GNL is edited and published by Jefferson, Louisiana based Jefferson Direct, Brien Lundin, President. Brien hosts the acclaimed New Orleans Investment Conference each year which has brought investors together with some of the best and most sought after financial experts and investment authorities in the world for over three decades. For more information visit GoldNewsletter.com or New Orleans Investment Conferences.

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