ChartBrief #19 Gold ETF Flows

One type of analysis you will often see on Topdown Charts is ETF flows – they can tell you a great deal about investor sentiment by looking at what investors are doing (versus what they are saying). One chart worth pointing out is that of Gold ETF flows – on a rolling quarterly basis gold ETF flows have turned negative after a period of frenzied inflows.  It’s worth pausing to reflect when you see these kinds of swings…

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The approach used to measure ETF flows for gold tracks all of the major US listed gold ETFs and takes a daily rolling quarterly view of fund flows into the ETFs and scales it by assets under management (also note it is adjusted for price so this is a pure view of fund flows).

There are a couple of insights that can be drawn from this indicator. First of all check out the bearish divergence, i.e. higher high on the gold price vs lower high on the ETF flows indicator – this represents waning interest among investors and already flagged the recent weakness.  Also note that the flows indicator was displaying a high degree of optimism/bullishness in the initial move of the gold price, since then it has flipped around to outflows.  While the bearish divergence suggests a bearish bias, the fact that flows have reversed could actually make for a good contrarian buying opportunity to get set if gold continues its upward move.

Bottom line: Gold ETF flows have gone negative after a frenzy earlier this year, this could be a contrarian buy signal all else equal.

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Topdown Charts: "chart driven macro insights" Based in Queenstown, New Zealand, Topdown Charts brings you independent research and analysis on global macro themes and trends. Topdown Charts covers multiple economies, markets, and asset classes with a distinct chart-driven focus. We are not bound by technical or fundamental dogma, and instead look to leverage any relevant factor to capture the theme. As such, here you will find some posts that are purely technical strategy, some that just cover economics and data, and some posts that use multiple inputs to tell the story and identify the opportunities. Callum Thomas Head of Research Callum is the founder of Topdown Charts. He previously worked in investment strategy and asset allocation at AMP Capital in the Multi-Asset division. Callum has a passion for global macro investing and has developed strong research and analytical expertise across economies and asset classes. Callum's approach is to utilise a blend of factors to inform the macro view.