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Metals , Investing
     

Gold: Why You Should Be Wary of the “Consensus”

Recent sentiment toward the yellow metal matched peak 2011 levels

by Bob Stokes
Updated: September 30, 2020

You may recall investor optimism that attended gold's then record high of $1921.50 in September 2011.

A Gallup poll from that time period captured the prevailing sentiment. Our Sept. 2, 2011 Elliott Wave Financial Forecast said:

Perhaps the strongest sign of a gold top is a recent Gallup poll showing Americans now consider gold to be the best long-term investment. Gallup parsed the survey by gender, age, income level and political affiliation and in every single subset, gold won out. ...Everyone is onboard gold's uptrend. It is surely a sign of exhaustion.

Indeed, less than a week later, gold hit its then record high.

Well, as you probably know, gold went on to pass that record high here in 2020. The price reached $2072.12 on August 8.

The August 14 Elliott Wave Theorist showed this figure and said:

GoldOptimism

[The figure] shows a 10-day moving average of Market Vane's Bullish Consensus toward gold. This indicator tracks the daily buy/sell recommendations of market analysts and commodity trading advisors. As you can see, the consensus is strongly bullish.

This strongly bullish was expressed less than two weeks later in this Yahoo! News headline (August 25):

Why $5000 Gold Could Soon Become A Reality

That's possible -- yet, if you've been keeping up with gold's price, you know that it's more than 4% lower (as of Sept. 25) than it was when the August Elliott Wave Theorist discussed Market Vane's Bullish Consensus.

Should investors expect the "bottom to drop out" from here on out, or is there still more upside to go for gold?

Well, besides sentiment measures, it's also a good idea to keep an eye on the Elliott wave structure of gold's price chart.

Learn what you need to know by reading our flagship investor package. Prepare now for what the Elliott wave model suggests is next for gold.

Far Too Many Investors LOSE Money in the Stock Market: Why?

EWI founder Robert Prechter says one of the main reasons is...

...That too many people make investment decisions based on the news of the day. In other words: They buy on good news and sell on bad news.

This happens especially at major market turns -- the worst time to make the mistake!

Learn what Elliott wave analysis reveals about today's stock market juncture, so you can make high-confidence preparations for what's likely next.


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Chipotle 70%-plus Rally to Record Highs Was on the Menu -- Back in March!

"It's important to … look at the bigger picture. This stock is still on course for much higher prices." That was our forecast for Chipotle, in March 2020. Now see what happened in the months that followed.

Bulls vs. Bears: This Sentiment Survey Provides Important Insights

Could the Dow Industrials hit 40,000 in 2021? At least one analyst says "yes." Bullish sentiment "remains as strong as ever." Let's delve into the details as you take look at this chart.

Look at These 2 Big Warning Signs for the U.S. Economy

The big economic news during the past several weeks was that the U.S. economy grew 33.1% on an annualized basis in Q3. However, the evidence shows that this figure does not tell the full story. Take a look at these two charts.