GLD Holdings Continue to Fall

Gold continues to rapidly lose friends over here in the West as the steady fall in holdings indicates the growing disillusionment of those who bought the metal thinking it would respond upward during this period of Central Bank actions to provide low interest rates and more liquidity.

One gets the distinct sense from watching the price action that even some of the more resolute bulls are now reading the handwriting on the wall and getting out as the bear market in gold becomes more deeply entrenched.

Look at the updated chart of the holdings of GLD, the big gold ETF. They fell another 2.39 tons since Friday of last week to sink to 738.82 tons. That is the lowest level of reported holdings since the last week of September in 2008. In other words, a fresh 6+ year low!

To further add insult to injury, both the HUI and the GDXJ, the latter which is especially pulling a disappearing act, surrendered their feeble gains from yesterday closing down near session lows.

As a matter of fact, one must go all the way back to October 27, 2008 to find a LOWER CLOSING PRICE in the HUI. Just for the record, the closing price of the HUI on that date was 151.57. We are talking about 6 years here as well. Prior to that, we are talking about going as far back as July 2003 to find a lower closing price. In other words, we are a mere 3 points away from seeing an ELEVEN YEAR LOW.

Of course we have the gold perma bulls talking the usual "capitulation" but such a "strategy" is the last resort of those who have lost so much money in an asset class that they have nothing else to lose at that point. Capitulation does one no good whatsoever if the stock they are invested in disappears from sight and the company ceases to exist as a viable entity. I expect we shall be seeing this occur.

There is no lesson that bites as harshly and stings so fiercely as a financial one. Listening to others without listening to the voice of the market itself is courting financial ruin. No man alive knows the future and those who speak with a feigned authority as if they do, prey on the unsuspecting and the naïve.

 The vast majority of people who have set aside some money with which to invest have worked very hard to secure that. It represents their life, their dreams, their hopes for their children or grandchildren or their security in their old age. To lose it, to watch it go up in smoke is a bitter, bitter thing but to realize that they have blindly followed someone else to their own ruin makes it an even more bitter pill to swallow.

It would be well to keep in mind an admonition from the Scriptures against those who mislead or deceive others.

"Hear this, you who trample the needy, to do away with the humble of the land, saying, "When will the new moon be over, so that we may sell grain, and the Sabbath, that we may open the wheat markets, to make the bushel smaller and the shekel bigger, and to cheat with dishonest scales, so as to buy the helpless for money and the needy for a pair of sandals, and that we may sell the refuse of the wheat."
...
The Lord has sworn by the PRIDE of Jacob, "Indeed, I will never forget any of their deeds... Then I shall turn your festivals into mourning and all your songs into lamentation; and I will bring sackcloth on everyone's loins and baldness upon every head, and I will make it like a time of mourning for an only son, and the end of it will be like a bitter day".   Amos 8: (4-10)