Sentiment Speaks: Why Would You Even Think About Buying Gold?

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About: SPDR Gold Trust ETF (GLD), Includes: AAAU, BAR, DGL, DGLD, DGP, DGZ, DZZ, GEUR, GHE, GHS, GLDI, GLDM, GLDW, GLL, GTU, GYEN, IAU, IAUF, OUNZ, PHYS, QGLDX, SGOL, UBG, UGL, UGLD
by: Avi Gilburt
Summary

Gold is a relic of the past.

Bullish sentiment is at multi-year lows.

I am expecting a major bottoming in the coming weeks.

Gold is a relic of the past. There is no interest from the millennials for gold. The cryptocurrencies are taking demand away from gold. Central banks have been selling gold over the last few years. Interest rates do not support a rally in gold. Gold funds have been closing of late, which evidences the lack of demand for gold.

We have heard so many reasons as to why no one should buy gold. In fact, the people you speak with about gold either view it with disgust (those who own it) or complete indifference (those who do not).

But, let me ask you a question: Is the best time to buy an asset when everyone loves it or hates it?

The bullish sentiment in the gold market is the lowest we have seen in years if not rivaling the same levels as the lows we have seen over decades. And, as Baron Rothschild was quoted as saying: "Buy when there is blood in the street... even if it is yours."

When GLD broke down below $117.40, I warned that this could cause blood to flow in the streets, as it opened the door to drop as deep as the $105 region. While I am unsure whether we will see levels that deep on this last pullback before the bull market resumes, I can tell you that I do not think we will spend much time down there should we see those levels. Rather, if we see the $105 region, it will likely be in an overreaction spike down which will likely provide us with one of those V bottoms. But, do take note that the overnight futures pricing has already struck the top to our bottoming target for the GLD.

While I don't always publicly provide the charts that I show to the members of my Market Pinball Wizard service, I think it would be helpful for you to see a visual of what I am seeing, and why I think we have a tremendous buying opportunity being presented to us.

As long as we remain below the $116 region and do not see an impulsive structure breaking out through that resistance, I am looking for a lower low to complete the larger degree wave II pullback. Moreover, as I have noted, that low can even be as deep as the $105 region, wherein we have an a=c target for this larger degree 2nd wave we have been mired within for the last 2 years. Yet, should we be able to see a strong break out in the coming weeks through the $116.50 level, then it opens the door to gold having bottomed. But, unfortunately, there are still a number of miners that will likely take a bit longer until they complete their pullback.

The fact that the market has dropped as deeply as it has can either be a point of frustration for you or a huge opportunity. Much depends on how you control your emotions and view the market. In fact, if you review the common sentiments I listed at the start of the article, that is what you want to be reading to suggest gold is striking a long-term low. So, I would strongly suggest you view this larger degree pullback as an opportunity to purchase assets in this complex at prices you may not again see in your lifetime.

Housekeeping Matter

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Disclosure: I am/we are long PHYSICAL METALS AND VARIOUS MINING STOCKS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I own short term hedges in GLD, GDX and NEM.