GLD’s mission is to track the gold price, but its shares have their own unique supply and demand that is totally independent from gold’s. So when American stock investors buy GLD shares at faster paces than gold itself is being bought, they will soon decouple to the upside. The only way GLD can keep on mirroring gold is if that excess differential buying pressure is equalized directly into the underlying gold market.
So when GLD-share demand exceeds gold’s, this ETF’s managers are forced to issue new GLD shares to offset this excess demand. Then the resulting proceeds are immediately used to buy physical gold bullion that is held in trust for GLD’s shareholders. Thus GLD’s holdings, which are published daily, reveal whether stock-market capital is flowing into or out of gold. They too are green lighting gold’s next upleg.