GLD: Expecting Additional Losses As Financial Conditions Tighten And USD Carry Improves

Pearl Gray Equity and Research4.81K FollowersFollow5ShareSavePlay(12min)Comment(1)SummaryI am reducing my portfolio's exposure to the SPDR Gold Shares ETF after riding out a prolonged rally.Gold's rise has likely been due to a structural rise of the geo risk premium. However, I don't think GLD ETF will cope in a shock event.Lower carry on the USD and loose financial conditions drove GLD ETF higher. I foresee a switch in both variables, given the structural implications of the U.S.-Iran conflict.Investors arguably created negative convexity in their portfolios by buying GLD ETF into a trend. Despite its recent losses, GLD remains distant from a statistical sell-off.Risks against my argument relate to structural buying from adversaries and USD hedging costs remaining low for foreigners. e-crow/iStock via Getty Images The SPDR Gold Shares ETF (GLD) is in intense focus, given the recent drop-off in physical gold prices. After reading a few comments on Seeking Alpha, I realized that many are in search ofThis article was written byPearl Gray Equity and Research4.81K FollowersFollowPearl Gray is a proprietary investment fund and independent market research firm. Our work on Seeking Alpha covers fixed-income, funds, preferred shares, and opportunistic calls on individual ordinary shares.Platform Author: Steve Booyens CFA, FRMSteve co-founded Pearl Gray in 2020. He doesn't believe in narrative-based decision-making, and therefore focuses on hidden macro, fundamental, and quant variables to identify both investing and trading alpha. He considers emphasis on portfolio risk-return utility and position sizing as essential to achieving success in financial markets. Steve identifies, invests, trades, and writes about financial markets for Peal Gray. Steve and Pearl Gray's articles and comments should not be considered as financial advice. Instead, his/our public commentary functions as a public journal, for track record-keeping.Disclaimer: Kindly note that our published content is dispensed as Independent Analysis and Doesn't Constitute Financial Advice. For any content-related concerns, contact Steve Booyens, CFA, FRM on LinkedIn or leave a message in the comments sectionAnalyst’s Disclosure: I/we have a beneficial long position in the shares of GLD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Kindly note that our content on Seeking Alpha and other platforms doesn't constitute financial advice. Instead, we set the tone for a discussion panel among subscribers. As such, we encourage you to consult a registered financial advisor before committing capital to financial instruments.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.