14 replies to this topic

[Kimston]

It's not as simple as looking at sentiment numbers on any given market when trying to assess market conditions. While it's undoubtedly more subjective, assessing the level of conviction of bulls or bears is probably much more important than just the percent bullish or bearish on any particular day or week. The level of conviction out there that gold is in a long-term bull market and must go up because of (you name the reason) is nothing short of amazing. No market has to do anything. There is and can be no absolute certitude about future events, especially in the markets.

What prompted the above comments (besides seeing the above described conviction in various posts here and on other forums) was an interview of Steve Leeb I just listened to at Kingworldnews.com: Leeb Interview.

My sense is that Leeb and others with his level of conviction will be carted off to rubber rooms before the final lows in metals and miners come in. In my analysis, it's becoming more likely that gold has made a generational top at 1920. As I have said in a number of posts over the last 18 months, the metals and mining shares will have good rallies (we may be starting one now, I really don't know) but those rallies should be used to get out or get short. I still think we will see sub 100 on HUI in the next few years. A weekly close above 2050 on gold would likely change my outlook dramatically.

Kimston

[dougie]

surely may be right but not at all sure what you mean by conviction of bulls and bears seems to me that finding a handful of leebs tells you nada

[flyers&divers]

Very good observations Kimston, thanks for sharing them. It leads one to thinking: is it at all productive to have deep attachments as a trader? If one had looked at PM's objectively, simply as another trading vehicle among many, it was clear that they acted extra weak in the universe of markets. I have an overlay on my workspace of a half year daily stochastic of SPX and whatever else I am looking at and it was like a diagonal cross. (They were some people on this and the FF board who had correct value ideas or were skeptical of the bull, congratulations to them). Markets stop and go, most of the time they are not in defined trends and it is hard to have outsize gains or pyramid trades unless there is a deluge, which seldom happens. The PM's were it and - also Yen related issues - and one wonders which market is next. Right now I am getting mechanical buy signal setups in a few miners/royalties that were not taken all the way down or bottomed earlier but even they are way under the set of averages I am using as trend indicators so I am supposed to pass on them. Unless this will be a V bottom, in which case I will miss it, PM's have to do more work to build a base for any rally to have legs. Which brings me to a full circle, one has to make trading decisions and success will come from one's skill as a trader. Well, then why not trade something obscure like master limited partnerships that do not have popular following and then one does not have to listen to the PM industry spewing out propaganda day in day out? Regards, F&D

[Kimston]

surely may be right but not at all sure what you mean by conviction of bulls and bears
seems to me that finding a handful of leebs tells you nada

By "conviction" I mean the absolute, incontrovertible certitude that gold will go up and you must stay in the market no matter what. It's not just a handful. It's Leeb, Sinclair, Turk, Celente, Sprott, Waltzek and virtually every other pundit with a wide following and an opinion on gold as well as posters on precious metals forums such as this one. As I said, the conviction factor is more subjective than looking at numbers, but being a student of markets and market psychology for many years, I believe it is far more important than just looking at sentiment numbers in a poll. The numbers will fluctuate wildly with short-term market movements, but I don't believe gold makes final lows until the level of conviction in the bulls is perceptibly broken. For those that don't have any idea what I'm talking about, please ponder the subject line of this thread.

All that being said, I always hold some physical metals as an insurance policy. However, I dumped 90% of my physical metals very near the top 18 months ago and went short metals and miners. I am currently flat and waiting for cycles to line up with a technical set-up to re-enter shorts. As mentioned in other threads, if silver gets down to 21, I would look at a potential long-side trade if the indicators looks good.

Kimston

[dougie]

but that is just the point: the conviction of the bulls is broken by virtually every measure. If you are taking about Sinclair, Who knows if his conviction will ever be broken even at gold 700 he will be spewing some nonsense. Look at the volume on the lows in GDX adn many many miners. That is conviction being broken imo Look at the HUI: gld ratio, again conviction being broken Look at Rydex levels. AS far as newsletter writers, again, most are not in here. Sure the big names above might not be out, but again, will they ever be. Worth watchin for sure

[tomterrific14]

but that is just the point: the conviction of the bulls is broken by virtually every measure. If you are taking about Sinclair, Who knows if his conviction will ever be broken even at gold 700 he will be spewing some nonsense. Look at the volume on the lows in GDX adn many many miners.
That is conviction being broken imo
Look at the HUI: gld ratio, again conviction being broken
Look at Rydex levels.

AS far as newsletter writers, again, most are not in here. Sure the big names above might not be out, but again, will they ever be.

Worth watchin for sure

"Look at the HUI: gld ratio"

http://goldsilverwor...arts-till-2012/

Click on HUI:GOLD ratio in above link. An update shows the ratio now at .21, which is as at the lower trendline of the 95% prediction band (regression band) of the past 17 years. The XAU:GOLD chart shows the same thing.

Current HUI:GOLD ratio:

http://stockcharts.c.......24hui:$GOLD

[Kimston]

but that is just the point: the conviction of the bulls is broken by virtually every measure. If you are taking about Sinclair, Who knows if his conviction will ever be broken even at gold 700 he will be spewing some nonsense. Look at the volume on the lows in GDX adn many many miners.
That is conviction being broken imo
Look at the HUI: gld ratio, again conviction being broken
Look at Rydex levels.

AS far as newsletter writers, again, most are not in here. Sure the big names above might not be out, but again, will they ever be.

Worth watchin for sure

"Look at the HUI: gld ratio"

http://goldsilverwor...arts-till-2012/

Click on HUI:GOLD ratio in above link. An update shows the ratio now at .21, which is as at the lower trendline of the 95% prediction band (regression band) of the past 17 years. The XAU:GOLD chart shows the same thing.

Current HUI:GOLD ratio:

http://stockcharts.c.......24hui:$GOLD

Thanks for the link to the those charts. I don't doubt the metals/miners are quite oversold and they could have a decent rally at any time. If it does begin a rally here, I doubt that gold will get above 1800 before another leg down starts. I think breaking significantly below the 1550 triple bottom is very likely to happen before the end of this year. In my analysis, and given the conviction outlined above that it must go up, I think the larger trend for gold will be sideways to lower for the foreseeable future.

Kimston

[dougie]

thanks Kimston! Value your insights !

[tomterrific14]

thanks Kimston! Value your insights !

http://www.acting-man.com/?p=22540

"A New Multi-Year Low in the HGNSI

There would be little need to write this update if not for a rather remarkable new sentiment record. After having been stuck for a while at minus 12.5, the Hulbert Gold Newsletter Sentiment Index (HGNSI), which measures the average recommendation of gold market timing advisers, has reached a level that hasn't been seen in a very long time, if ever (it definitely has never occurred since the beginning of the bull market in 1999/2000).

The average recommendation is now to be 31% net short. Given that this is an average and considering that there are probably a handful of permabulls in the newsletter business, this is pretty extreme – especially as neither gold nor silver have broken the major lateral support levels that have been in force since the beginning of the consolidation period in 2011. Of course they still may break said supports. The point is that this has not happened yet, while sentiment is at levels that would normally suggest otherwise. That is quite astonishing."

[Kimston]

After the break of key support there is no perceptible break in conviction and absolute certitude regarding bull market status here: Link

And McHugh is bullish and quite certain (that can't be good if you're in the bull camp). The main theme of his Elliott Wave count and commentary: "Gold has not topped, and is not in a Bear market. Let me be clear about that." Link

I think I need to re-title this thread. Apparently it should have been "It's impossible to see the forest if you're one of the trees"

In a bear market, indicators and sentiment get oversold....even going to new extremes. There will be sizable short covering rallies but, based on my Elliott Wave count and some proprietary analysis, the larger trend is still sideways to lower for the foreseeable future. Long-term target for HUI remains sub 100. Two weekly closes above 2200 on gold would likely change my opinion and E-Wave count dramatically.

Kimston