by Adam Hamilton, CPA
With gold awakening from its usual summer slumber, traders are getting more excited about its prospects. Presumably this shifting sentiment will even grow to encompass futures traders, who’ve been incredibly bearish on the yellow metal for months now. While traders hold futures guys in high esteem, they are just as susceptible to groupthink as everyone else. They are actually a powerful contrary indicator for gold.
Just a month ago, it seemed like you couldn’t even give gold away. Bearishness abounded, and commentary and analysis were overwhelmingly pessimistic and calling for major new lows soon. Go back and skim the stuff published on gold in mid-July, and you’ll quickly see what I mean. Because it had languished in a correction since August 2011, shedding 18.8%, everyone was very negative on it.