Chart: Gold ETF Flows Show Capitulation

Gold is under fire, and you can see it in the flows that investors are starting to capitulate. Facing headwinds of a stronger US dollar, and rising real yields, gold has broken down through its short term uptrend line (which came after failing to break through resistance). With futures positioning stretched to the downside and ETF outflows accelerating gold really is at a critical point here - it could easily bounce short term, but it could likewise spiral down. I've previously mentioned that gold could easily go to $1000, particularly with the reversal of quantitative easing, and once the flows get going, price could end up going further and faster than you expect. So as I've been telling clients, gold may not be the hedge you think it is...

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