Gold Bears Out of the Woodwork and Into Your Head?

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 newsletter?…

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.

hulbert gold

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.

[edit]  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 bears.

gld

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.

Au CoT

au cot

Ag CoT

ag cot

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