The GLD (gold ETF) fell half a percent yesterday, but its bullion holdings jumped by over 15 tonnes to a new all-time high - it's now over 1,134 tonnes.


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That’s the first new high in holdings since early April, and the second double-digit one-day takedown since May 22, which once again seems to suggest a resumption of the first quarter's investment demand surge for the yellow metal. If so, that surge should be enough to carry gold above $1000 and to a new all-time high rather quickly in the face of normal seasonal weakness in jewelry demand coming out of India.

As I've noted before, I suspect many gold investors are likely to be “sucker-punched,” to some extent, by the coming rally in gold, because they'll be expecting the normal seasonal tendencies to play out. However, Indian demand has been nonexistent for months now. It’s investment demand that's driving the current rally in gold, and investment demand isn't seasonal. Many gold investors will no doubt be left behind on the coming rally to new highs, because they're too focused on seasonality, instead of on why that seasonality traditionally occurs.

Speaking of investment demand: According to the World Gold Council, if global pension funds decided to increase their exposure to gold by about 1.2%, it would require more than 44,000 tonnes, or roughly 27% of all the gold that's ever come out of the ground.

Along those same lines, we got an interesting data point yesterday - one which suggests that this process may finally be underway. Northwestern Mutual Life Insurance (the third-largest US life insurer) said it had purchased gold for the first time in 152 years (see the Bloomberg story here).