……But who’s going to buy when it comes time to sell?
SPDR Gold Trust (GLD), the gold ETF, is the sixth-largest holder of gold in the world — ahead of China. However, it does not determine its purchases and sales of physical gold. When investors buy GLD it has to buy gold, driving up the price, which raises a question: who will be buying gold from GLD when investors decide to sell?
Gold is one of those weird assets that doesn’t have an intrinsic value. You can’t run a discounted cash flow on it. It has no cash flows. It is an asset where perception and reality are deeply intertwined. A violent sell-off in GLD would drive the price of gold down dramatically. No longer perceived as a store of value, the gold game will quickly be over. From an article by Vitality Katsenelson at contrarianedge.com