There’s nothing better than a hated bull market…
This type of market doesn’t come around often. The entire premise goes against how markets tend to operate.
When prices rise, investors usually get more excited. Folks see the allure of fast profits and throw caution to the wind. This quirk of market psychology is as crucial to understand as fundamentals, economic trends, or interest-rate changes.
It also means that if you find a rising market that investors want nothing to do with, the boom is sure to continue.
That’s the situation we have in gold right now. And as I’ll explain today, it means gold’s new record highs are just the beginning.
A lot has happened in the gold market lately. The metal recently hit new all-time highs. That’s exciting in its own right… But the lack of investor interest is just as noteworthy.
You see, the current gold boom is nothing like the ones we saw in the past two decades.
Those were the typical booms you’d expect. Prices soared. The big gains thrilled investors… So they kept flooding in.
The opposite is happening today…
Investors have been selling gold for years. And despite the recent rally, the selling has only intensified.
We can see this by looking at shares outstanding of the two largest gold exchange-traded funds (“ETFs”). I’m talking about SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU). The two funds are massive, with nearly $100 billion in combined assets.
ETFs create and liquidate shares based on investor demand. That means these funds issue more shares if investors want gold… And they remove shares when investors aren’t interested.
Given gold’s recent rally and the new all-time highs, we’d expect share counts to be rising. But we’re seeing the opposite situation play out. Take a look…
The chart shows the combined share count of GLD and IAU. Shares outstanding for both funds have been falling for years. They’re down a combined 29% since peaking in 2020.
You might look at this and think that investors will never get on board with the gold boom. But that idea fights investor psychology…
The truth is, investors care about one thing: making money. And gold is becoming a moneymaking asset.
Folks might not be buying yet. But if the metal is rising despite these outflows, it’ll be hard for the current boom to slow down. As prices continue higher, these sellers will eventually cry “uncle.”
They’ll stop selling and start buying. And that new wave of buying should catapult the current bull market to even greater heights.
In short, we’re still in the early stages of a major bull market for gold. Investors still hate the boom today… But that hate won’t last forever. And we’ll see the biggest gains once sentiment reverses.
Now is the time to get in position before the crowd wakes up and starts buying. And that means you might want to consider owning gold today.
Good investing,
Brett Eversole
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Source: Daily Wealth