When it comes to investing, I don’t care much for crowded trains/crowded trades! If an asset class becomes too popular, who else can buy it and drive it higher?
Back in August GLD became the largest ETF in the States, inflows were hitting record levels, Gold was hitting channel resistance and a 30-year Fibonacci extension level was also at hand….this set up of circumstances is why the “Power of the Pattern” suggested to harvest/hedge long Gold positions if conservative, short gold if aggressive the morning of the highs on 8/23 (see post here)
Last week I shared with Premium Members that the train was crowded again in the Gold complex, due to inflows were hitting record levels, while GLD was creating a series of lower highs. Below is an update to the chart sent to Premium members last week…
CLICK ON CHART TO ENLARGE
The vast majority of the time when you have record inflows into an asset and price weakness/a price breakdown is taking place at the same time, that asset should see much lower prices in its future! You can find this inflow chart at Blomberg (see chart here)
GLD is breaking below the flag while inflows are strong….what could happen to GLD if these record inflows turn into record outflows?
9 days ago the “Power of the Pattern” reflected that GLD and SLV were at key resistance and if aggressive this resistance presented a great place to short the metals (See post here)