Why Gold Just Posted Its Biggest Drop This Year

[psycopk]

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(The following is a complimentary article from MarketWatch’s premium newsletters. For information on Mark Hulbert’s insightful commentary, including an analysis of over 500 portfolios, please click here.)

CHAPEL HILL, N.C. (MarketWatch) — Gold’s $30-plus drop today — the biggest daily decline of the year — serves as a powerful reminder that the market for the yellow metal remains vulnerable to shifts in investor mood.

And that does not bode well for gold’s near-term prospects. That’s because there’s more bullishness than bearishness today among the gold traders I monitor, which, in turn, means it’s more likely that shifts in mood will cause gold to fall than to rise.

Consider the average recommended gold-market exposure among a subset of short-term gold-timing newsletters tracked by the Hulbert Financial Digest (as measured by the Hulbert Gold Newsletter Sentiment Index, or HGNSI). The average currently stands at 23.3%.

To put that into context, consider that as recently as early June, the HGNSI stood at minus 30%. In other words, in a little more than a month’s time, the average gold timer has increased his recommended gold-exposure level by 53.3 percentage points.

That’s a remarkably quick retreat from bearishness.

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 other words, the initial rally off the final low will most likely be greeted by disbelief. Only well into the new bull market will market timers be eager to jump back on the bullish bandwagon.

In fact, a close analysis of gold sentiment over the past 12 months suggests we’re getting further away from extreme pessimism, not closer.

Notice from the accompanying chart that there have been three major periods of bearishness over the past year among monitored gold timers. As you can see, the trend in sentiment across these three periods is of higher sentiment levels, now lower.

If gold’s recent low represented a major bottom, then contrarian analysis suggests we would be seeing just the reverse pattern, with each successive sentiment low lower than the previous one.

To the extent that contrarian analysis is right, gold traders should be prepared for more days like today, when August gold futures fell 2.2% to $1,306.70 an ounce. Unless you have nerves of steel and are ready and willing to hold on to gold despite extraordinary volatility, you might want to wait until sentiment conditions are more favorable.

[Spartan]

koneskuntunnara..?

[psycopk]

koneskuntunnara..?

 

last line chudaleda.. inka padudi anta.. wait re

[Spartan]

last line chudaleda.. inka padudi anta.. wait re

 

i bought it @1260 ba...

[psycopk]

i bought it @1260 ba...

 

dont worry you will be safe.. if i had more money in hand with no other financial plan i would defnetly invest upto 20k in gold during this time

[Spartan]

dont worry you will be safe.. if i had more money in hand with no other financial plan i would defnetly invest upto 20k in gold during this time

 

me venture enta varaku vachindi...?

[Aryaa]

dont worry you will be safe.. if i had more money in hand with no other financial plan i would defnetly invest upto 20k in gold during this time

India Enni pattukellochu billa Lu. Ee madya ekkuva news lo vastunay Adi pattesaru etc

[psycopk]

me venture enta varaku vachindi...?

 

registration aaipoindi.. appu techaru chala chotla.. accounts settle cheyali mellaga

[psycopk]

India Enni pattukellochu billa Lu. Ee madya ekkuva news lo vastunay Adi pattesaru etc

 

adi endo mana daridram.. country poor/developing.. vellaki enduku evadu enta gold techukunte.. vella sommu edo potunatu buildup istaru...  more gold india ki vaste india ki manchide kada.. pitcha fruit gallu.. vellaki vacha chillar tax kosam tokkalo hadavidi

[Spartan]

adi endo mana daridram.. country poor/developing.. vellaki enduku evadu enta gold techukunte.. vella sommu edo potunatu buildup istaru...  more gold india ki vaste india ki manchide kada.. pitcha fruit gallu.. vellaki vacha chillar tax kosam tokkalo hadavidi

 

nuvu oka bisket teskopote ok...

 

alage vanda mandi vand biskets teskopote.....?

 

that what they are targetting...kaani local ga unna inspectors..pedda chapalni vadilesi..chinna chapalni mana lanti vallani padtunnaru..for lunchum..

[Spartan]

registration aaipoindi.. appu techaru chala chotla.. accounts settle cheyali mellaga

 

oh avuna good ....mari what plan..commercial or residential...

 

 

avg ga enta price...ankuntunnar..

[Praveenz]

appude na 1260 varku wait cheyyandi.

[psycopk]

nuvu oka bisket teskopote ok...

 

alage vanda mandi vand biskets teskopote.....?

 

that what they are targetting...kaani local ga unna inspectors..pedda chapalni vadilesi..chinna chapalni mana lanti vallani padtunnaru..for lunchum..

 

vanda kadu.. 1lackh mandi tesuku potaru.. neku vachina nastam enti?? india ki gold reserves perugutai kada..

[Spartan]

vanda kadu.. 1lackh mandi tesuku potaru.. neku vachina nastam enti?? india ki gold reserves perugutai kada..

 

unaccounted reserves man.....

 

ala reserves pergutai ante...India ki already unna unaccounted gold is worth lot more than the leading gold reserve holding country...

[psycopk]

unaccounted reserves man.....

 

ala reserves pergutai ante...India ki already unna unaccounted gold is worth lot more than the leading gold reserve holding country...

 

edo okati manchide kada..  gov ki enti noppi... US ki tesuku vaste em adagatam ledu kada.. india ki enduku ee sodi