You know what I mean… the rising tide of gold bearish articles now
flooding the blogosphere. Smart writers far and wide schooling gold
bugs about how gold is going to 1400 or even 1200 as the economy
strengthens and the disaster premium is removed or as a deflationary
spiral takes hold. Talk about opposite ends of a spectrum from which to
bear talk the monetary metal.
Yes guys, gold became sponsored by the dumbest, most knee jerky money on the planet… 1.5 years ago
at the height of the euro crisis! Now you pile on and try to school
the masses on contrarian theory? It really looks a lot like trend
following and wanna be heroism to me. But whatever.
So where were these contrarians in summer, 2011 when when people
should legitimately have been concerned about gold’s dangerous sentiment
structure due to the big knee jerk into the metal? Where were the
know-it-alls just after the recent QE3 when this was inserted into our
Sentiment is over bullish in the precious metals. Public opinion is over bullish,
Hulbert’s HGNSI is over bullish and the CoT data show that the little and big
speculators are over bullish. This should be cleared out before we renew our bullish
enthusiasm on a risk vs. reward basis. Broad stock sentiment is in a better state than
in the precious metals. It is mostly neutral.
Well, that brief summation has now been flipped over on its head and
risk vs. reward is bullish in gold, meaning upside potential is now
significantly better than downside potential.
Speaking of newsletters, here’s the graphic evidence to the
“suicidal” gold newsletter writer sentiment (HGNSI) we noted recently.
The most recent reading at Sentimentrader.com had been -6.3% and I noted earlier in the week that a friend had anecdotally advised -12.5%. Well, here it is.
The time to be taking a warning on a gold correction was summer,
2011. Nothing is sure in this screwed up financial world. But risk vs.
reward is positive now and the growing legion of bloggers talking the
metal down does nothing to challenge that notion.
 Adding a chart of GLD for visual perspective. While
yesterday’s hype out of Europe was a big nothing, GLD is filling a gap
it left yesterday. This could also be another in a line of Bear Flags.
The daily trend is down and this is the stuff that emboldens the gold
New lows (to that of last summer) would kill the intermediate trend
but as of now, this remains a correction to a new intermediate up trend,
as hard as that is to imagine at the moment.
[edit #2] Well what do you know? The Commitments of Traders are out
and it seems like the trend here continues to be gold’s (and silver’s)
friend on the long road away from risk and into reward. But never let
some facts get in the way of a good story. So, with gold due to
continue in its strained (and bullish) consolidation, let the smarty
pants gold bears have their day in the sun. They really do sound smart
because they have 1.5 years of consolidation/correction to make them
sound that way.