Over the past month, the price of gold sank, taking the SPDR Gold Shares Trust (NYSE Arca: GLD) with it. Many gold aficionados were perplexed by the seemingly disparate buildup in GLD's bullion stores and the softness in the trust's share price. After all, GLD's bullion hoard reached a record 1,320 tonnes on June 30, but its share price had peaked five days before at the double-top level near $123.

Since then, GLD shares have dipped to the $115 area and are now churning in a $2 trading range. The trust's bullion assets have also declined, but by a relatively modest degree. Some 12 tonnes of gold—0.9 percent of the June 30 inventory—have been offloaded, accompanying a 26.9 percent tumble in GLD's closing price.

Truth be told, GLD's bullion inventory level isn't a very good indicator of investor sentiment about its shares' and, by extension, gold's price. If you look back over the past six months, the correlation between the trust's metal assets and GLD's share price is only 10.3 percent.

There are better gauges of investor sentiment. One of them, featured in this column recently ("Gold's Waning Strength"), is the Money Flow Index. The MFI is a volume-weighted measure of a security's price strength. Measured on a scale of 0-100, a higher index value implies greater strength in the security's prevailing price trend.

Why's the MFI a better indicator? Well, its correlation to GLD's price—at 55.7 percent—is higher than that of the trust's metal tonnage. But that's not the point. Really, the correlation isn't that high, but it's because the correlation isn't perfect that the MFI's valuable. Let's not get ahead of ourselves, however. First, let's take a picture of the trend lines in GLD's bullion assets and its MFI.

GLD Gold Assets And Money Flow Index

The MFI peaked in mid-April as GLD's bullion stash was being built up. At that point, of course, so was GLD's share price. It took some time to perceive the disparity between the MFI trend and that of GLD's price. Another picture tells the story.

GLD Share Price And MFI

Notice how the MFI's trend moved from one of confluence to GLD's price to disparity? That became a warning sign of an impending market break. Yes, GLD's share price rose from April through June, but investors' conviction level was waning.

Now that prices have broken lower, the trend lines are in confluence again. An eventual shift in investor sentiment will likely be signaled by an upswing in the MFI. That could happen before a turnaround in GLD's share price or along with it. In any event, the MFI's got to improve before GLD becomes buoyant.

For gold fans, that's enough reason to keep an eye on it.