Bob Moriarty of 321Gold explores how sentiment affects trading in the precious metals markets, and discusses a new service that can help investors gauge sentiment.
I saw a correction in the metals coming as early as August. I wrote a piece early in the month I called Money Always Moves from Weak Hands into Strong Hands. I was both right and wrong. Yes, we were going to have a correction in gold and silver but I missed the top by three weeks. If I had known about a site I just discovered, I could have nailed the top in gold nearly to the day as I did with silver in 2011.
People tend to get confused with tops and bottoms in markets. Gold hit its lowest price in twenty years in August of 1999. But silver didn’t hit its lowest price until late November of 2001. Silver was cheaper in nominal terms in 1993 but in inflation adjusted terms, the low for silver was late 2001. I called that too.
So which was the bottom? Was it gold in August of 1999 or silver in November of 2001? But wait, the HUI and XAU bottomed on the same day in late September of 2000. The low in metals and resource shares took over two years to complete. So is the bottom in the metals a date and time or is it a process?
Actually it’s both. If you can find accurate enough data on sentiment you can forget TA and fundamentals that do a poor job of calling tops and bottoms. Since gold and silver are different and the shares in gold and silver are entirely another breed, you need to understand that tops and bottoms are both a process but individual components are something that can …read more