Gold crashes two weeks ago.
The lower prices have prompted headline-grabbing purchases of physical gold in Asia.
We’ve seen tons of pictures like this one, showing people racing for the gold stores, and cleaning out shelves of their inventory.
But gold bulls shouldn’t get too excited by this.
Because while the gold selloff has prompted some buying from consumers, it’s resulted in panic selling among ETF holders.
This chart from Nomura shows the huge gold outflows from gold ETFs since the crash.
You can see in the deep red lines in recent days that the outflows from ETFs have been massive, offsetting any demand from physical.
Both the physical buying and the gold selling make sense when prices crash.
Buyers of jewelry like the low prices. Speculators who only care about price see reason to sell. Physical alone buying isn’t enough to change the story.