Related Topics
Metals , Investing

Be Aware of This Extreme Development in Gold

Investors are making a record bet on gold ETFs

by Bob Stokes
Updated: April 14, 2020

Sentiment extremes -- positive or negative -- often serve as red flags in financial markets.

The reason why is that these extremes often occur near key turning points in prices.

Consider silver, and the negative sentiment toward the precious metal about a year-and-a-half ago.

On November 14, 2018, after silver had been declining for 5 months and had just made a new 2½ year low at $13.87, we issued a rare, combined Elliott Wave Theorist / Elliott Wave Financial Forecast Interim Bulletin that said, in part:

Silver may have made its low for the year this morning.... Sentiment is one-sided. The percentage of bulls is very low.

As it turned out, silver bottomed that very day and then rallied for several months.

Then, in Aug. 2019, sentiment turned decidedly bullish. Our Sept. 2019 Elliott Wave Financial Forecast showed this chart and said (published on Aug. 30, 2019):


This week started with a higher gap opening. Interest in silver is naturally increasing as prices do, as shown by the record rise in the monthly volume in silver put and call options.

Five days later, silver had hit a high of $19.69 and has been trading lower since.

Now, sentiment is not everything, and it's not always a precise timing indicator. Markets can stay overbought or oversold for a long time. But you'd be hard-pressed to find a market reversal without a sentiment extreme.

With that in mind, let's now segue into what's going on with gold. Here's a chart and commentary from our April 2020 Elliott Wave Financial Forecast:


This chart shows that total gold holdings by ETFs jumped to a new high on March 31. Investors are speculating to a record degree that gold will continue to rally, even though prices are not at new highs.

It's an extreme all right. But right now, gold's Elliott wave pattern provides an even more detailed snapshot of investor psychology.

Learn what our Elliott wave experts are saying about what they expect next for gold without any obligation for 30 days.

Follow the link below to start your risk-free trial to our flagship investor package.

An Entire Team of Elliott Wave Experts on Your Side

When the stock market is fast-moving -- like it is now -- you have a deep bench of experienced Elliott wave analysts on your side, to deliver unfolding chart patterns as it happens.

The near-term market trend can change in a single day!

Rest assured: You will know shortly after we know.

We invite you to read our latest outlook for stocks, bonds, gold, silver, the U.S. dollar and more, with no obligation for 30 days.

Follow the link below to have our financial forecasts on your computer screen in just moments.

Aussie Dollar Soars to Multi-Month High: You Can't Have Your Fed Stimulus Boost AND Eat It Too

In mid-April, Currency Pro Service told subscribers to expect a rising trend in the Aussie/US dollar. We called for a powerful Elliott Wave pattern known as "a third-of-a-third wave" higher. Now see for yourself what followed.


See Just How "Historic" 2020 Has Been for U.S. Stocks

When you look at the DJIA's past 100 years, a clear Elliott wave pattern emerges. But in 2020, another technical price pattern has entered the picture. It's a rare pattern. In fact, it's so rare, it's only appeared once in the past 100 years. Watch our monthly Global Market Perspective contributor explain the implications.


NASDAQ vs. DJIA: Does the Recent Divergence Matter?

Since its March bottom below 7000, the NASDAQ has rallied over 4000 points to a new record high. The DJIA… not so much. It's not the first time we've seen a "languishing Dow and the ebullient NASDAQ." This excerpt from our new, August Elliott Wave Financial Forecast explains.