I am a pay subscriber to several investment newsletters one of which is William Fleckenstein’s market wrap.
He made an interesting observation last week about gold stocks:
“If you look at the shares outstanding of the GDX, they are down about 10% this year, whereas those outstanding in DUST, the triple-levered bearish ETF, have increased by almost 50% this year. Said slightly differently, there is net liquidation of mining shares owned by the bullish ETF and a huge increase in share ownership in the triple-bearish bet.”
In other words the traders in the gold stock ETF’s are more bearish than ever despite the fact that gold stocks are up this year.
You see when you buy an ETF shares of that ETF are created as your money is used to buy the stocks in it.
And when you sell shares are reduced.
Fleck found that there are now as few shares outstanding in GDX as there were in 2015 near the lows!
The thing is no one cares about gold stocks as the masses decided to chase Bitcoin last year!