The "pause" documented earlier this week has become a genuine unwind. Short interest in GLD dropped 30% in a single session on July 10, falling to 11.3 million shares — the steepest single-day cover on record. That reverses most of the late-June build almost overnight.
What makes this interesting: bears are leaving, but the lending market is getting more expensive as they go.
Short interest peaked at 16.4 million shares on June 29. As of July 10, it sits at 11.3 million — essentially back to early-June levels. The one-week decline is 24%. The one-month gain, which briefly stood above 65%, has shrunk to just 20.5%.
This is a clean reversal, not a wobble. The previous article noted a "pause, not a reversal." The data now says it was the start of a reversal.
Availability has opened up alongside the covering. It stood at roughly 90% in late June — tight by GLD's standards. It now reads 124.7%. For every share already lent out, 1.25 shares remain available to borrow. The lending pool has room again.
Despite the short covering, cost to borrow has not followed availability higher. It sits at 0.81% as of July 10 — up 39% over the past week. In early July it briefly touched 0.98% before pulling back slightly.
That divergence is the most interesting data point here. Shorts are covering. Availability is looser. Yet borrow cost is still rising. One interpretation: the remaining short positions are being rolled into harder-to-borrow buckets, pushing up the marginal cost even as headline short interest falls.
The put-call ratio has dropped to 0.58 — below its 20-day mean of 0.62 and sitting 1.4 standard deviations below that mean. The 52-week range runs from 0.39 to 0.70. At 0.58, options positioning is tilted toward calls but not at an extreme.
The direction is consistent with the short covering: money is coming off the bear side across both the lending and options markets simultaneously.
The tension between a falling borrow cost (you'd expect from covering) and a rising cost to borrow (what's actually happening) will resolve one of two ways. Either the remaining shorts are sticky and concentrated, keeping borrow pressure elevated. Or cost to borrow catches down to match the looser availability, signaling the unwind is complete.
See the live data behind this article on ORTEX.
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