Jin Yidan, an excellent precious metal analyst of the last issue.
Sina Finance:The largest in the worldGold ETF-SPDR GOLD TrustWhat is the reference significance of the change in position for investors to buy and sell gold? Why is its position highly positively related to the medium-and long-term trend of gold? Does the change of the world's largest silver ETF--iShares Silver Trust position have the same positive correlation with silver?
Minmetals Economic and Trade Futures Jin YidanThe issuing mechanism of SPDR GOLD Trust is that investors buy shares, and the corresponding ETF managers buy physical gold and keep it in the vault on behalf of investors. According to the balance sheet of gold supply and demand, gold ETFs and similar products are an important item under the gold demand project. For example, gold ETFs and similar products accounted for 10% of gold demand in 2019, and gold ETFs and similar products accounted for 27% of gold demand in the first quarter of 2020. Therefore, the change of gold ETF position is an important factor in the change of gold demand. In addition, gold ETFs and similar products are also one of the most dramatic changes under the gold supply and demand balance project. From the balance sheet, the supply of gold is stable and moderate, the demand for gold ornaments is basically stable, the fluctuation of gold bars and coins is relatively mild, and the central bank has bought moderately in the past 10 years. In this way, the ETF change of gold has become the main factor affecting the price of gold, and its position is highly positively correlated with the medium-and long-term trend of gold.
For investors, the change in gold ETF position is a reflection of most investors' buying or selling decisions. It can be said that the change in ETF position is only a reflection of price fluctuations and cannot guide future price fluctuations, because whether most investors will continue to buy or sell in the future does not depend on the level of their positions in the past. But,Dow JonesThe theory "price evolves in the way of trend". When ETF's position increases, we expect him to continue to increase, until ETF's position decreases, we expect him to continue to decrease, so as to judge whether the price goes up or down. Or, the position is very low or extremely high judgment that he will reverse, which has a certain reference significance. However, this is no different from the technical analysis of the price. Therefore, I think that it is not meaningful to observe ETF positions to guide trading, but it is possible to observe the changes of ETF positions to judge the hot degree of market speculation.
Silver ETF--iShares Silver Trust is the same as gold ETF, but because the position of ETF under silver demand item is still much smaller than that of gold, its correlation with silver price is not as strong as gold. As the price of silver is also a commodity dominated by financial attributes, the change of silver ETF reflects the change of speculative power, and its long-term positive correlation with silver price is relatively certain. From the data point of view, we find that the correlation coefficient between gold price and ETF position will be much greater than silver.
From the current market point of view, the continuous increase of ETF holdings in the international precious metal market is an important support for silver prices to climb out of the epidemic pit, as the precious metal ETF is unilateral bulls, this force will continue to act on the follow-up trend of gold and silver prices. As the current price of precious metals is still undervalued relative to the expansion of credit currencies, we can expect this force to start again.
Responsible Editor: Tang Jing