by Taki, Secular Investor:
July was a horrible month for precious metals prices. Sentiment reached levels never seen before. As metals and the miners broke through a long term support line, so did pessimism.
To get an idea of how bad market sentiment is, we are including a very long term chart going back to 1992 (courtesy of Sentimentrader). As readers can see, market sentiment in the last 2 years is worse than the bear market lows of 1998 – 2000
When everyone panicked in July, we urged investors to stay calm, and grab the opportunity in the gold market space. A contrarian call which characterizes our vision. For instance, our column of July 19th contained the following quote:
“Can precious metals go lower from here? Yes, no doubt. But, if we get a breakdown, then a sharp V-shaped recovery should take place very quickly. In that sense, timing the bottom is a fool’s game. Investors will be chasing the gold price, with little success whatsoever.”
Two weeks later, on August 2nd, when literally everyone was throwing in the towel, convinced that gold would collapse to $800 an ounce, we wrote the following:
“Although we do not believe that markets trend higher or lower based on ‘reasons’, we still think there are two signals that indicate there is not much downside left for gold.
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