From Heinz on article by Veneroso Message 20850260
i've seen this, but disagree, at least in the near to medium term (longer term i also expect a large correction, but it probably will only begin sometime next year).
1. the Rydex pm fund has lost 50% of its assets from the top (mostly due to outflows).
2. i closely watch money flows in the sector, and institutional buyers and other big traders have been scooping up the gold stocks sold by small traders.
3. the sector put/call open interest ratio is close to a 52 week high.
4. gold timers have reduced their exposure from nearly 80% to less than 20%.
5. i also closely watch 8 different gold analysts with various approaches (technical, fundamental or a combination). of those, 2 are currently bullish, one doesn't know what to think, and 5 are bearish. this is the highest proportion of bears in this (admittedly small) sample since the '01 lows.
6. the gold futures put/call OI ratio is close to a 52 week high as well.
7. short interest in the sector has recently risen sharply after a brief dip over the summer months.
conclusion: the bullish consensus on gold, but especially gold equities, is far lower than everybody assumes. in fact, it can be said that skepticism is extremely high at the moment (no doubt partly on account of recent poor sector performance). a medium term rally in the sector has become highly likely at this point.
not to forget, contrary to what the article insinuates, Veneroso didn't just 'become bullish right at the lows' - he was bullish all the way down in '97-'99. just as he got bullish too early, he's now bearish too early, imo.
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