Gold Bulls Punked On Fears Of Fundamentally Stronger US Dollar
Gold bulls have been retreating in earnest over the last two months. The rally in Gold (GLD), when compared to performance of a fundamentally stronger US Dollar (UUP), appears to have been more of a short-term cyclical event. As the US economy recovers on expectations of higher interest rates and a more business friendly environment under President Elect Trump’s administration, the Dollar will continue to punk Gold prices. The chart below speaks volumes on the sentiment within capital markets as longer term trends and patterns are not accidental and tend to reconfirm fundamentals.
Until the next financial crisis or recession that ushers in low to negative interest rates or grave geopolitical catastrophe threatening to upset the economic equilibrium within G20 economies, the cyclical outlook for GLD remains bearish.
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"The rally in Gold (GLD)..."
Speaking of GLD in particular, why is there a clause in the GLD prospectus that states GLD has no right to audit subcustodial gold holdings? Why would the organizations behind GLD forfeit this right and create this massive audit loophole? I haven't heard of a single good reason for the existence of this loophole so far. In addition to the audit loophole, GLD claims to be fully backed by physical gold bullion but yet it refuses to give retail investors the right to redeem for any of these ‘claimed’ gold bullion. I've read about and verified a number of other red flags as well:
"I remember CNBC's Bob Pisani visiting GLD's vault in a well documented segment. GLD's administration arranged this visit to disprove everyone claiming that GLD's gold did not exist. However, Mr. Pisani held up a gold bar with the following serial number - ZJ6752. This serial number did not appear on the most recent bar list during that time period. Cheviot Asset Management’s Ned Naylor-Leyland later found out that this "GLD" bar actually belonged to ETF Securities."
"Did anyone try calling the GLD hotline at 866▪320▪4053 in search of numerical details on GLD's insurance? The prospectus vaguely states "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." When I asked about how much of the gold was insured, the representative proceeded to act as if he didn't know and said they were just the "marketing agent" for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors."