Gold pushes marginally lower in early trading
Short term market timers bearishness on gold is a ‘positive omen’

(USAGOLD – 10/4/2021) – Gold pushed marginally lower in early trading despite growing concern about stagflation, stiffening energy prices and a weaker dollar. It is down $7 at $1755. Silver is down 14¢ at $22.49. MarketWatch’s Mark Hulbert says that gold market timers have rarely been more bearish than they were last week, according to his Gold Newsletter Sentiment Index – a development he sees as a “positive omen.”

“To appreciate just how extremely bearish the gold timers have become,” he writes in his regular MarketWatch column, “consider the average recommended gold market exposure level among several dozen short-term gold timers my firm tracks on a daily basis. … This average dropped to minus 45.2% this week, which means that the typical gold timer was recommending that clients allocate nearly half their gold trading portfolios to going short.” According to Hulbert, the radical drop in sentiment usually signals contrarians that the time is ripe to enter the market. “[T]he odds,” he concludes, “favor a gold rally currently.”

Chart of the Day

Gold price
(Annual average 1971-present)

bar chart showing the annual average gold price 1971 to present
Sources: St. Louis Federal Reserve [FRED], ICE Benchmark Administration

Chart note: This chart amply illustrates a point Interest Rate Observer’s James Grant made recently that “over the course of a reasonable investment, long-term horizon, [gold] will spare you the punishment that our central banks so willfully are meting out.” In 2020, it posted its all-time average high at $1770.37. It has been our experience – and we have been in the gold business for a very long time – that the investor who sees gold as a long-term store of value and a form of savings is often the one who reaps the rewards, even when the quiet times are taken into account.


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