Wednesday, July 04, 2007

Everyone Is Bearish On Gold







The markets were closed today so I spent the evening going through my charts and reading up on various markets.

I came across the put/call ratio for XAU (gold index) and was surprised to see that this ratio is at a very high level. From a contrarian point of view this is quite bullish because in the past whenever this ratio reached such a high level, a bottom in gold developed.

So based on such bearish sentiment in the gold market, I will be looking to get long GLD at some point.

I'd like to see the market consolidate for a few days and then break higher like it did last March (shaded area) before I do any buying.

The purpose of this post is to let those of you who are interested in gold know that a bottom may be forming based on an enormous amount of bearish sentiment. Let's keep an eye on this metal.

2 comments:

throwaway said...

Kevin, could I ask where did you get the put/call chart from? It certainly seems like a useful indicator!

Kevin said...

http://www.schaeffersresearch.com

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