Last Updated With Closing Market Prices and Document Filings from: 11 February 2016 (as available at TSX closing time).
Assuming trade executions at the next day closing price, this simple trading rule generated close to $30,000 (best case) from a start of $10,000 in November 2004 by trading NEM. The buy and hold return on NEM over the same period was -48%.
Although I am not suggesting that trading gold producers based solely on this unoptimized, simplistic algorithm is a good idea, I do believe that the evidence presented above is enough to make serious traders consider whether the GLD bullion inventory deserves a place in their trading algorithms.
I will be posting signal updates at end of day here. I also plan to trade a model portofila based on the GLD Bullion Inventory signal starting with the next "go long" or "go short" signal.
Black Swans Circling Canada's Resource Sector, Feb 9, 2016
Outlook For Gold and Gold Equities in 2016, Jan 12, 2016
|Date (AMC)||Signal (for next day execution)|
Signal Definitions and Notes:
|Out - Waiting Short Confirmation: No action requird. Previous GLD change was a GLD outflow. A second outflow event is still required to trigger an open short call.|
|Out -- Waiting Long Confirmation: No action required. Previous GLD change was a GLD inflow. A second inflow event is still required to trigger an open long call.|
|Open Short - two consequitive outflow events (with possible zero flow days in between) occurred this day which is the signal to short gold producers. Use additional factors to select best short candidates.|
|Close Short - a GLD inflow occurred. Close gold equity short positions.|
|Open Long - two consequitive GLD inflow events (with possible zero flow days in between) is the signal to go long gold producers. Use additional factors to select best long candidates.|
|Close Long - a GLD outflow occurred. Close gold equity long positions.|
|Note 1: All trades are executed on the following trading day since the GLD signal is generated after markets have closed for the day|
|Note 2: The GLD algorithm is fully detailed, along with backtest results from 2004 (the year GLD was launched), in Trading Gold Producers Using GLD Bullion Inventory Levels As A Signal .|
|2016-02-11||Out -- Waiting Long Confirmation|
|2016-02-10||Out -- Waiting Short Confirmation|
The Chinese New Year and the week long Spring Festival Golden Week runs from 7th to the 13th of February. With the price of gold and GLG gold holdings sharply above the 6Q regression line, we have a classic setup for the start of a multi-month run down in the price of gold.
The bullish stance in the weekly Kitco survey, by both Main Street and Wall Street, for gold next week provides more supporting evidence that the end of the current gold run is very close - markets like it best when most participants are off side.
Sure, it is possible that this is the start of a new bull run in price of gold. But the gold price action over the last 6 quarters says otherwise. The charts on the right show that similar setups have occurred several times in the last years - e.g. October 2015 and January 2015.
Reviewing data from the 1970s, I put the odds at 16 in 20 that the gold down trend continues in 2016. See my Seeking Alpha Article links below for a detailed discussion.
The following plot shows showing a per day count of gold/silver producers/develoeprs/explorers with one or more "metric impacting" Sedar updates (e.g. resource disclosurers, financials, shares for debt, private placements, options grants, project ownership changes, mergers/acquisitions, etc.).
Click on the thumb nail plot for a full page view. The trend line in the full page view clearly shows the TSX/TSXv gold/silver miner group filing activity is shrinking.
Note: the few days with zero updates were excluded.
Using the most recently available quarterly production reports, the gold and silver stocks listed on the TSX/TSXv are reporting production totals on a rolling 4 quarters of:
Gold: 25.5M ounces (874.29 tons or 793.14 tonnes), a 0.8% change over the 4 quarters ending at the prior quarter.
Silver: 188.73M ounces (6,470.74 tons or 5,870.16 tonnes), a 2.6% change over the previous 4 quarters ending at the prior quarter.
The running totals for quarterly production numbers for companies with a quarter ending in the months of October, November and December 2015, along with the changes on a Quarter on Quarter (QoQ) basis, for TSX/TSXv Gold and Silver producers are:
Latest Q Report
Latest Q Report
|53 of 80||4,735,474 oz
Gold reserves and resources for TSX/TSXv listed companies with at least 12.5% of their in situ metal values from gold:
All Gold Equities
Based on gold production rates reports over the last 4Q, TSX/TSXv gold producers have 21.5 years of gold reserves.
Silver reserves and resources for TSX/TSXv listed companies with at least 12.5% of their in situ metal values from silver:
All Silver Equities
Based on silver production rates reports over the last 4Q, TSX/TSXv silver producers have 33.6 years of reserves.
The following table includes TSX/TSXv listed companies with at least 12.5 of their in situ metal values from gold or silver (in US$).
Type of Equity
Estimated Discovery Cost
Net Working Capital
TSX/TSXv company may appear at most one time in the following table. Companies without a gold/silver resource (generators, historic and grass roots) are included on the basis of qualitative assessment of descriptions published in quarterly financial statements.
|Category||# of Companies in Category|
Gold/Silver Streaming and Royalty Companies
Gold/Silver Generator Model Companies
Gold/Silver Grass Roots Explorers
Total Companies Listed in Sedar.com
Note 1: All TSX/TSXv listed companies are required to file in Sedar.com. However, Sedar.com companies include current companies, companies that no longer file (i.e. as a result of take over, merger, re-organization, bankruptcy, etc.), CNDX companies (Canadian over the counter market listings), and companies listed on foreign exchanges (e.g. US OTC, London, etc.) that have some connection with Canadian investors.
Click on the chart for a detailed view.
|TSX/TSXv Grouping||TSX/TSXv Total Market Capitalization
(Millions of US$)
|Gold & Silver Producers||$68,814|
|Gold & Silver Streamers||$9,569|
|Gold & Silver Developers||$6,287|
|Gold & Silver Explorers||$2,398|
|Total TSX/TSXv Gold & Silver Miners||$87,068|
|Market Cap Estimate For the World's
Gold & Silver miners (Millions of US$)
Note: All TSX/TSXv companies with at least 12.5% of their total in situ metal value coming from either gold or silver and which match the category definitions, are included in the above table.
Gold & Silver Producers category includes those companies that report quarterly production counts and revenues for gold and/or silver production.
Gold & Silver Streamers category includes companies focused on creating gold/silver streams or royalty income flows.
Gold & Silver Developers category includes companies with an explicit plan to start production in the near term or which have a spending profile and work plans to imply potential future production.
Gold & Silver Explorers category includes companies that are primarily focused on expanding resource counts at one or more existing gold and silver projects without indicating plans for future production.
Generator and grass roots companies are not covered.
Market capitalization is always computed using closing market price (expressed in US$ using exchange rates in effact at market closing time) and the issued share of each company. Updates are made daily after the TSX market close.
TSX/TSXv Market Share Assumptions: the TSX/TSXv gold producers are estimated to represent approximately 33% of the world's gold producers since the TSX/TSXv gold producers report approximately 1/3 of the world's yearly gold production. The streamers, explorers and developers are estimated to represent very roughly 50% of the world total for companies in those groupings.
The Market Cap Estimate For the World's Gold & Silver miners is computed based on the actual TSX/TSXv market capitalizations, computed on a daily basis here using closing market prices and Sedar.com material filings as available at the TSX market closing time, and applying the market share assumptions detailed above.
Detailed fundamental metrics on the TSX/TSXv gold and silver miners, including per company details such as:
gold and silver reserves / resources breakdowns
enterprise value per ounce of gold reserve (or resource)
average ore value per tonne
breakdown of percentage of gold equivalent ounces by country (2 letter ISO codes)
options to fully customize report to your specific needs
are available on a subscription basis.
Click on the chart for a detailed view along with a full chart legend. Please see Outlook For Gold and Gold Equities in 2016 at Seeking Alpha for the details of my gold price linear regressions from 1990 (with back testing from 1970) and odds computation.
Click here for a scatter plot of GLD gold holdings versus price of gold.
To say predicting the price of gold is difficult is an understatement. However we say know with certainty that the price of gold in 2016 is going to do one of the following:
Down Trend Continues: The multi-year down trend from 2013 continues into 2016.
Up Trend Starts: It is not impossible for gold to take a sharp up turn in early 2016 and continuing rising into 2017.
Inflection Year - No Clear Trend: 2008 was an inflection point for the gold uptrend that ended in 2012. In 2009 the up trend continued.
2012 was also an inflection year and a multi-year down trend formed in 2013.
Looking at gold price linear regressions from 1990, the odds for gold prices in 2016 can be summarized as (updated 11 Jan):
Most Probable 2016 Scenario: Gold Price Down trend Continues in 2016: Odds estimated a ~ 16 out of 20
Less Probable Scenario: Gold Price Has an Inflection in 2016: Odds estimated at ~ 2 out of 20
Least Probable Scenario - Gold Ends 2016 in a Solid Uptrend: Odds estimated at 2 out of 20
Please see Outlook For Gold and Gold Equities in 2016 at Seeking Alpha for the details of my gold price linear regressions from 1990 (with back testing from 1970) and odds computation.
The January 2, 2016 Barron's Gold Likely to Stay Tarnished in 2016 is supportive of the down trend continuing view and the article starts out with:
The 4:35AM PST version of the Barrons article also included the following quote at the end of the article:
"The Last commodities boon is over, and...the next remains a generation away," Deltec International Group writes in a research report. In fact, the price of the metal probably will fall as low as $800 an ounce next year, predicts Atul Lele, the fund's chief investment officer.
The legendary investor Mr. Rogers in December 2015 Kitco interviews continues to hold out for lower gold prices before moving holdings from the US$ to gold bullion.
The money flows out of the GLD ETF during 2015 does not indicate a turn in the price of gold. Rather, the money flow out the GLD mirrors the down trend in gold prices since 2013.
Until there is hard evidence in a reversal in the gold trend, the outlook has to remain negative.
View Friday Outlook for Gold Next Week for past weeks here.
GDX is by far the largest gold equity ETF today - 29 May 2015 net assets were $6.3B U.S., roughly equal to 2% of the estimated total market capitalization of all of the world's gold and silver miners (public + private). And with more than $27B US in physical gold holdings, the GLD ETF is equal to approximately 10% of that world gold and silver mining sector.
The monthly money flows for the GLD and GDX ETFs along with price of gold (POG) and Shanghai Gold Exchange (SGE) daily settlement volumes totals for the month are detailed below.
|YYYY-MM||Net Flow (US$)||Average
|See Gold Equity ETF Money Flows for per
day flows over last month + definitions
GLD ETF outflows for 2015 equaled $2,945.7M.
GDX ETF inflows for 2015 equaled $362.3M.
|Daily Price of Gold changes
Money Flows in/out of GLD, GDX and GDXJ
plus the SGE Premiums and Settlement volumes
A ? indicates that the closing data for the ETF is to be released - ETF updates happen typically after 8PM EST. Otherwise the cell is left blank if there was no change from the previous day.
A X indicates the ETF did NOT release the end of day holdings -- a very rare event but Van Eck failed to release an update for GDXJ and GDX for August 26/27 (apparently due to a Bank of New York Mellon having an issue with its technological systems). As of August 31 GDX/GDXJ reporting appears to be back to normal.
POG % Chg is computed based on the Kitco gold spot price bid at TSX market closing time and the price at the previous TSX market close.
For GLD, a positive cell value indicated the value of the gold (in millions of dollars) added to the ETF while a negative cell value indicated the value of gold removed from the ETF. Values are computed from data provided by the GLD ETF operator.
For the gold equity ETF trading symbol columns, a positive cell value indicates the values of the equities (in millions of dollars) added to the ETF while a negative cell value (shown in red) indicates the value of the equities removed from the ETF.
The SGE Prem. (Shanghai Gold Exchange Premium) is computed as the difference between the SGE gold closing price (coverted at exchange rates in effect at the TSX close) and gold spot price as reported by Kitco at the TSX close. SGE Sett. (Shanghai Gold Exchange Settlement Volume) is sum of the Au(T+D) and mAu(T+D) daily settlement volumes as reported by the SGE.
The Shanghai Gold Exchange Yuan Renminbi price of gold and premium/discount in US dollars relative to the Kitco spot price at TSX close follows (yearly average and 1 year rolling time period comparisons):
Note: See China Public Holiday Calendar for the dates of up coming Chinese holidays. For 2015, National Day holiday runs from 1 October to 7 October and is an important time for public gold purchases.Yearly Average Shanghai Gold Exchange Premium:
2016 (YTD average): $2.81
2015 (Full year average): $2.17
2014 (Full year average): $2.02
2013 (Full year average): $14.94
|Date||Shanghai Gold Exchange Close - Au(T+D)||Kitco Spot Price at TSX Close||SGE Δ|
|12 February 2016||NA||NA||?||NA|
|11 February 2016||NA||NA||$1247||NA|
|10 February 2016||NA||NA||$1196||NA|
|9 February 2016||NA||NA||$1189||NA|
|8 February 2016||NA||NA||$1191||NA|
|5 February 2016||243.91||$1156||$1173||$18|
|14 August 2015||217.37||$1088||$1089||$1|
|13 August 2015||231.30||$1124||$1115||$9|
|12 August 2015||231.82||$1129||$1124||$5|
|11 August 2015||224.62||$1105||$1108||$3|
|10 August 2015||219.67||$1100||$1103||$3|
|7 August 2015||218.95||$1097||$1092||$5|
|12 February 2015||245.83||$1235||$1228||$6|
|11 February 2015||248.63||$1238||$1220||$19|
|10 February 2015||250.11||$1247||$1234||$13|
|9 February 2015||249.54||$1242||$1241||$1|
|6 February 2015||255.83||$1270||$1235||$35|
|5 February 2015||253.61||$1262||$1267||$5|
Currency conversions made using spot rates available on the date. The SGE Δ is computed as the SGE closing price in US$ minus Kitco Spot Price (bid) at TSX Close.
A ? indicates that the closing data update is pending.
See the SGE page for daily updates on the Shanghai Gold Exchange, including a comparison of SGE gold delivery from vault in 2014 versus 2013.
Contact email@example.com to request a free no obligation evaluation copy of a TSX/TSXv gold/silver miner daily, weekly and monthly reports and private view web pages. I will be happy to work with you to design a product that matches your exact information capture and processing needs.
If you are using in house staff to maintain such metrics then you should consider the advantages of outsourcing this task to the GoldMinerPulse team which can prepare custom reports using XML, Excel spreadsheets and/or private access PHP pages.
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