In direct contrast to the “euphoria days” of 2011, most investors have now turned bearish on gold after experiencing a multi-year bear market. Contrarian investors – who generally invest against the consensus or the crowd – argue that’s a good sign and believe the bear market in gold has likely reached an end.
One way to determine this is by looking at the behavior of retail investors, who are much smaller, speculative buyers, vs. the wholesale market, who buy much larger quantities and, often, when prices are more attractive.
Retail Sentiment Bearish
‘I promise you, phones are not ringing,’ says Kathy Derbes, a bullion dealer we recently spoke to on Financial Sense Newshour. ‘No one even wants to talk about gold. That’s where we are now … and it’s the mirror opposite of where we were in 2011.’
Derbes says the current investor psychology towards gold is extremely bearish. While it was difficult to source coins and bars at the peak of the market in 2011, the opposite is true now.
‘Prices have come down dramatically,’ she said. ‘There is little buying (and) clients are selling back to us.’
This post was published at FinancialSense on 05/11/2017.
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