Gold Price $3500 vs. the Investing Crowd
Wednesday, 6/11/2025 12:37
Did gold investing prices leap too far already in 2025...?
DID GOLD $3500 mark a big top for the safe-haven metal back in April?
asks Adrian Ash at BullionVault.
History says maybe. Investment professionals think so, too.
"According to Bank of America's latest fund managers survey, nearly half of the fund managers surveyed (49%) see long gold, or bets that gold prices will rise, as the most crowded trade in the market right now.
"This,"
explained Yahoo! in April, "marks the first time in two years that fund managers did not see the Magnificent Seven [of giant US tech stocks] as Wall Street's most crowded trade."
Gold's over-crowding
then got worse in May, or so the 208 institutional fund managers replying to BoA's monthly survey said.
A massive 58% of them labelled gold "the most crowded trade"...!
But really?
Sure, physical gold investing has picked up in 2025.
March and April
each brought BullionVault more first-time users than any month since New Year 2021. Most of them have chosen to buy gold first.
But new account openings held a long way short of the genuine gold rush in 2020 or 2011, before
easing back in May and June so far...
...and while lots of retail coin-and-bar shops will tell you (via the more gullible end of the mainstream media) that they are flooded with demand, the torrent of secondhand coins and bars sold back to them has continued to match if not drown it.
Secondly, yes. Some finance-industry products also saw demand rise. But only some, and only somewhat.
Gold-backed ETF trust funds worldwide, for instance, needed the most bullion at the start of May since way back in September 2022.
But that quantity rose only 15% from the 4-year low hit a year ago, and trust funds listed in Europe grew less than 7%...
...before the global total then shrank for 3 weeks running this May.
More telling still, speculative betting on US gold futures and options actually fell as the price raced up to April's new all-time highs. Because the hot money of hedge funds, CTAs and other 'Managed Money' traders has walked away from gold, not pushed in, so far in 2025.
Over the 21 weeks since New Year's Eve, the price of gold has risen by 28%. Yet the size of the net spec long in Comex gold futures and options has shrunk by more than a third, dropping below its 10-year, 5-year and 3-year averages and defying its
previous but currently broken link with gold's price direction.
So whatever "crowd" is buying and boosting gold, it doesn't work or trade in London, Frankfurt, Paris or New York. But that's hardly news. Because time and again since gold turned decisively higher in late 2023, the data and the facts on the ground point instead to
China's private gold-market flows, plus
'the rest vs. the West' among central banks and sovereign wealth.
Are those two trades crowded? Maybe.
"The largest traders in SHFE Gold have
accumulated a new all-time-high position size," says commodity strategist Daniel Ghali at Canadian brokerage TD Securities. But there's no relationship BullionVault can find between the size of speculative betting in Shanghai futures and the direction of prices (contrasting with the way that US Comex bulls tend to track if not drive the price). And besides, as Ghali also notes, "Chinese gold ETF flows remain muted",
snapping the sharp rise (albeit from a very low base) seen earlier this year.
Central banks, meantime, continue adding
gold to their official reserves as a group overall...
...but
at a slower pace as prices hit fresh record highs in April...
...led by
the long-time gold loving NBP of Poland, followed by the Czechs, Chinese and Turkey.
Add in unofficial, unreported gold reserves demand however, and total central-bank purchases are set to top 1,000 for the 4th year running in 2025 on the forecast estimate from specialist analysts Metals Focus. That's a big number, the biggest since before World War 2 when first breached in 2022. But it's not accelerating, not in weight terms, on MF's analysis. So that crowd is now a longstanding (if cloaked) feature of the market.
And anyway, are those the crowds which BoA's fund managers are talking about anyway?
The BoA survey asks a daft question and gets a daft answer. What its respondents mean by "crowded" isn't defined. Nor is the market insight or intelligence which tells them what other investors are doing.
Sure, there are many more bulls who are now much more vocal than there were six or 12 months ago, let alone
when gold was half today's price back in mid-2022.
But simply scrolling through the headlines on your phone doesn't tell you anything about
what other investors are really doing with their money (or their clients' savings). Nor does it cut through the hype to show you whether
salesmen and promoters are making it up or not.
Fact is, the very idea of trying to spot the "most crowded trade" is a psychological snake-pit writhing with bias, envy and FOMO...
...and BoA's question most likely reflects a) what an actual crowd doesn't currently own, and therefore b) which asset they want to believe has run too high, too fast, because they have missed out.
And lo! Fund managers who don't own gold also think it's over-valued, too.
"Usually, when you ask a bunch of investors whether something is under- or overvalued, and a bunch of them agree, the thing to do is run the other way," writes columnist Robert Armstrong at the
Financial Times,
also reviewing May's BoA survey.
"The interesting bit is that the last two times a lot of managers agreed that gold was overvalued, in 2020 and in 2011, they were right.
"Look at how gold performed subsequently (dark blue line). After 2011's fall, it took a decade for gold to retake its high in nominal terms."
Interesting, yes. But useful?
If the BoA survey offers a guide to gold's future value, its 100% strike rate represents only 2-in-2 so far. That's nowhere near a pattern.
More notably, the survey has also given two clear 'false positives' to date as well (early 2010, late 2024).
So again, BoA's survey most likely says ways more about the psychology of fund managers than it does about gold's record price run of either 2011, 2020 or 2025 to date.
As for the gold market itself, it's far from empty. But crowded with bulls it ain't.
"Nordnet fund savers bought global funds in May, dumped gold and silver," says a headline about the Swedish share-trading platform.
"Gold is out, equities are in," says a report from India quoting asset managers WhiteOak.
"Bitcoin ETFs pull in $9 billion as investors ditch gold holdings," adds Bloomberg, pointing to US trust-fund flows.
Bottom line? Gold has jumped and lots of fund managers missed it. But that doesn't make it over-valued or crowded. And where the BoA survey may have value as a contrarian guide, it's
far more likely to shine a light on US equities and other rich-world stock markets rather than gold.
Cos that's what the fund management crowd buys and sells.
Glance at gold's price chart, meantime, and you can't miss the size and speed of this spring's surge. That might suggest $3500 marked an important, long-term high. Because gold has a nasty habit of setting big ugly tops.
More to come in Part 2...
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