Where have all the lines outside Martin Place gone?

I'm having far fewer discussions on gold these days with clients... and the lines outside Martin Place are long gone...

Gold is down almost -30% from the peak and on June 26 a "Death Cross" signal was triggered. Silver is down over 50% from its peak in November.

The price action in gold and silver was fuelled by speculative retail flows, according to the Bank of International Settlements. The vehicles of choice for retail investors were leveraged ETFs and futures contracts.

This casino-like behaviour led to outsized moves in the gold and silver price, amplified by a narrative of "de-dollarisation". It is symptomatic of a lot of the moves we are seeing in risk assets, including equity markets.

In the words of the BIS: "The abrupt price drop and the spike in precious metals' volatility point to the role of retail flows, and amplification of price moves due to forced sales by leveraged ETFs, trend-following investors such as commodity trading advisers (CTAs) and margin dynamics."

This is now a persistent feature of short-term moves in markets, as investors seek to cash in on narratives and thematic driven investment themes. It is exacerbated by geopolitical uncertainty and the transformative nature of AI. 

We believe the best response to a more flow-driven market is not more short-term trading. It is patient, fundamental and genuinely differentiated active management.