Tags: gold | bulls | Hulbert | complacent

Mark Hulbert: Gold Bulls Are Way Too Complacent for Their Own Good

By    |   Tuesday, 15 July 2014 01:20 PM

Gold posted its biggest drop of the year this week, but that does not mean there's now an all-clear signal for buyers of the yellow metal.

Investor sentiment suggests it has even further to go on the downside following Monday’s big $30 drop, according to MarketWatch columnist Mark Hulbert.

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Hulbert said a major worrisome sign is in the measure of short-term gold-timing newsletters that he concocted, his Hulbert Gold Newsletter Sentiment Index. That index has seen gold-exposure recommendations go from minus 30 percent in June to 23.3 percent currently, an increase of 53.3 percent.

“That’s a remarkably quick retreat from bearishness,” Hulbert said. “According to contrarian analysis, major market bottoms are more likely to be greeted by stubbornly held bearishness, just the opposite of what we’ve seen recently. In fact, a close analysis of gold sentiment over the past 12 months suggests we’re getting further away from extreme pessimism, not closer.”

Hulbert said that if his contrarian analysis is correct, gold traders should be wary of more days like Monday, when August gold futures fell 2.2 percent to $1,306.70 per ounce.

The Wall Street Journal attributed the fall in gold prices to investor uncertainty ahead of actions by the Federal Reserve on monetary policy and higher interest rates.

“Gold is a zero-yielding asset and struggles to attract investor attention when interest rates are climbing because assets like Treasury bonds can offer a greater return,” the Journal noted.

USA Today said gold prices may also be hampered by the recent outlooks from some prominent analysts.

Goldman Sachs analyst Jeffrey Currie has predicted prices will be lower by the end of 2014. Societe Generale SA’s Michael Haigh forecast in a July 11 report that the metal will fall about 5 percent by the fourth quarter, USA Today said.

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Gold posted its biggest drop of the year this week, but that does not mean there's now an all-clear signal for buyers of the yellow metal.
gold, bulls, Hulbert, complacent
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2014-20-15
Tuesday, 15 July 2014 01:20 PM
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