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November 3, 2019 | 3 Gold Charts for Red-Blooded Bull

Sean Brodrick

Sean is the natural resource analyst for Weiss Group. You can read his thoughts on gold, oil, cannabis, uranium and other natural resources at

Gold was on the defensive this week after a strong close to last week. That’s not surprising. Gold, like everything else in the markets, zig-zags its way higher.

When it’s “noisy” in the markets — like it is right now with trade wars, actual wars in the Middle East and a Fed that is running around with scissors, cutting rates all over the place — I like to look at charts.

Those help me tune out the noise and see what’s really going in our favorite investments. Here are three for you … and they show just some of the forces that are lining up to push gold and silver higher.

First, let’s take a look at the holdings of all gold and silver ETFs. You’ll notice a trend  …


You can see that holding in gold and silver ETFs bounced along in the same range for a long time. Then the money started pouring in. By mid-September, investors had poured nearly $8 billion into exchange-traded funds that hold gold. There are now 81.887 million ounces in the various gold ETFs.

Money poured into silver ETFs, too. ETFs loaded up with 2,900 metric tons, or 93,237,200 over the summer. That’s 21% of annual production. There’s now 630 million ounces of silver held in ETFs.

Many market watchers thought September would be the blow-off. But more and more investors are piling in.

This is a short-term bullish signal. This tells us that investors are looking around and physical precious metals are one of the best investments they can find.

Why is gold (and silver) a top trading choice? This next chart should help answer that question.

It shows the total amount of negative-yielding debt in the world (in black) and the price of gold (in yellow) through last Friday.


You can see that both rallied together starting last year and throughout much of this year. While we can’t be certain, it’s likely that the mountain of negative-yielding debt in the world is making investors nervous … and their nervousness is driving them into gold.

The total amount of negative-yielding debt is off its highs, but still at enormous levels. And that’s supportive of higher gold prices.

Next is a chart of gold vs. real U.S. bond yields (i.e., nominal yield minus the market-implied rate of inflation).


Inflation is relatively flat at 1.7%. But that’s perilously close to the rate on U.S. bonds. The 10-year Treasury note also had a recent yield of 1.7%. What that means is you are getting practically no return on a 10-year Treasury, when you figure in inflation.

One of the arguments bears like to make about gold is it pays no interest. Well, accounting for inflation, bonds pay precious little interest. And sometimes the real yield is actually negative.

You can see that since real yields started to sink in March, gold has moved higher. This probably isn’t a coincidence.

Gold is now trading right at $1,500. It could go lower, but in this bull market, pullbacks can be bought.

All the best,


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November 3rd, 2019

Posted In: The Edelson Institute

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