Despite Friday's decline in the gold price, SPDR GOLD TRUST ETFs' (GLD) gold holdings rose a third of a tonne to just over 1029 tonnes and another new all-time high.
Friday, COMEX open interest rose by a touch again on Wednesday -- to 373,339 contracts -- despite the sharp decline in the gold price. Which suggests once again that the decline was primarily the result of more heavy short selling by gold bears - and not bulls closing out longs.
In fact, if we look at the rate of growth in the shares outstanding of the 2x short gold ETFs (DZZ and GLL), you can see the rapid increase in the rate of new shorts that's occurred in just these 2 ETFs over the past couple of weeks.
Given that the GLD ETF hasn't sold an ounce during this decline (and actually added a little Friday), this is the setup for a huge short squeeze wherever this 4-day decline in gold terminates. Friday's dip back to what was the October high and the ensuing reversal to end on the highs may just have signaled we've hammered out a low for this decline.
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