"David, I recall a few months ago, that you said approximately that you felt a good indicator of gold turning up would be when total holdings of Gold ETFs was rising again.

"While total gold ETF holdings are not rising again just yet (though looks like a possible bottom might be forming), I notice a significant rise in total holdings of Silver ETFs during July. What do you make of that?"

David Fuller's view Thanks for your observations and interesting question which will be of interest to a number of other subscribers.

I think it would be premature to conclude that Total Known ETF Holdings of Gold had bottomed (note: these ETFs are not updated every day). It will inevitably get a technical rally at some point, just as we saw setbacks and occasional length ranges on the way up. However, this Index only peaked as 2012 was ending, whereas the long advance dates back to 2004. Moreover, the ETF Index has fallen much more quickly than it rose. The Total Known ETF Holdings of Silver has steadied recently but it also shows a loss of upward momentum dating back to 2011.

Silver (weekly & daily) has lost downside momentum since July near the psychological $20 region. While this is the first significant area of potential support from the extensive trading range just beneath that price, there has been little to date in the way of upward dynamics which would be a sign of base formation development. Similarly, while silver and gold became quite overextended relative to their 200-day MAs in July, the yellow metal's rally to date has been somewhat better (weekly & daily) but not sufficient to signal that a sustainable recovery is underway. Moreover, it was checked at the first area of overhead resistance. It will now be interesting to see if support is encountered above the June low.

In conclusion, these two precious metals may have reached significant lows, but there is no conclusive evidence of this, in my opinion. Meanwhile, the bear trends are only being questioned. I think we should stay interested in gold and silver, but I would not want to re-enter these markets too early. Instead, I would rather commence re-establishing long-side investment positions when there is clearer evidence that base formation development is underway.