by Pater Tenebrarum, Acting-Man.com:
Gold’s Triangle, Tax Loss Selling Pressure and a Surfeit of Bearish Sentiment
Here we are again, donning our hat of Patron Saint of Lost Causes to take a look at the gold sector. While Acting Man was on its unexpected hiatus, nothing much actually happened, which is to say, price movements in gold and gold stocks were uneventful, with the latter continuing to trade at extremely low levels relative to gold (in fact, a new all time record low was established in terms of the XAU-gold ratio).
Tax loss selling has weighed on gold stocks in addition to the usual litany of problems, such as extremely bearish sentiment. If we employ the ratio of gold stocks to gold as a sentiment measure, which strikes us as a legitimate way of looking at it, then it can be stated that sentiment has never been more lopsidedly bearish than it is now – not even in 1942, when shortly after the Pearl Harbor attack, the ratio of gold stocks to gold set its previous historic low.
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