As The Market Ear noted, GLD and SLV are trading at a significant premium to net asset value. This is to be expected given investors' and traders' headlong rush towards precious metals.
Looking at a longer-term version of this indicator, GLD premium to Net Asset Value (NAV)'s 100-day average is at the 3rd highest level of all time. The last 2 spikes occurred during the previous 2 precious metals bull markets:
Those 2 historical cases saw gold climb further in the short term (animal spirits!) before a multi-month pullback/correction began.
The annualized return for GLD is actually higher when the premium is above .15% than it is when the fund is trading at a persistent discount. While some of the extremes in premium/discount preceded peaks/troughs in gold, respectively, trying to identify those peaks/troughs in real-time proved inconsistent.
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We also looked at:
- The silver ETF, SLV, is at an extreme premium to its net asset value, too
- We keep seeing odd breadth readings in big up days in the S&P 500
- Gold and silver are nearing a near-historic extreme above their short-, medium- and long-term moving averages
- The VIX term structure is hitting new lows for this move
- The Nasdaq has been extremely volatile, what that's meant before
The post titled Gold bugs push their biggest ETF above what it's worth was originally published as on SentimenTrader.com on 2020-08-07.
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