Using insights from the Black App on Bloomberg {APPS BLACK<GO>}, we reveal how gold's all-time high and 21% YTD increase are driving short covering and momentum strategies across ETFs like GLD and SLV, while gold mining stocks lag behind.

Gold has reached an all-time high, up 21% year-to-date (YTD). This indicates strong investor interest and a bullish sentiment towards gold, likely driven by safe-haven demand or inflationary concerns.

GLD, the ETF that tracks gold, is also at an all-time high, mirroring the strong performance of the underlying commodity.

The short position in GLD has been decreasing as the price rises. This suggests that traders are covering their short positions and not re-establishing them, indicating a momentum-driven strategy.

This behavior aligns with a bullish trend, where short-sellers are compelled to exit as the asset’s price continues to increase.

GDX is trading below its all-time high reached during the COVID-19 pandemic. Despite gold achieving new highs, GDX has not yet matched its previous peak, suggesting that gold mining stocks are lagging relative to gold’s performance.

The short position in GDX has been decreasing on the way up and increasing on the way down. This indicates that short-sellers are more active during declines and reduce their positions during rises, reflecting a more reactive or contrarian approach to GDX’s price movements.

SLV has also risen but remains below its all-time high. This shows that while silver prices have increased, they have not reached the same peak as gold.

The short position in SLV has been shrinking as the price rises. Similar to GLD, this suggests that short-sellers are covering their positions, reflecting a bullish sentiment towards silver, though with some caution due to its lower peak compared to gold.

Momentum strategies are evident in the borrow market for GLD, GDX, and SLV, as indicated by the behavior of short positions aligning with price movements. This suggests that traders are employing momentum-driven strategies, covering shorts in rising markets and increasing shorts in declining markets.

USO displays a different pattern compared to the other ETFs. The position increases on the way up and decreases on the way down, reflecting a contrarian approach by oil investors. This suggests that oil investors are more inclined to build positions during price increases and reduce them during declines, in anticipation of future oil price movements or market conditions.

Want to know more?

Access this data in real time using S3’s BLACK APP or Contact us to get started.