Gold/GDX: The Bearish Picture, 2015-2019 Review

Hulbert Gold Newsletter Sentiment Index, or HGNSI

Mark Hulbert makes a very strong bearish case with his sentiment readings. I pay attention to that, as wave counts come to an end when sentiment is very bullish or bearish.

When the mainstream analysts start forecasting crazy bullish gold forecasts like $3000 gold or higher, then who is left to come in?

Below is the simple chart version of the commercials being net short, while the speculators have a huge long position. The last 5 speculators bars also has a flat top, which shows they are not that enthusiastic to take on more bullish positions.

The speculators are the emotional players and they will be the first to sell gold when this gold bull market turns out to be a dud!

While gold was still in a rally, the commercials added to their bearish positions, but the speculators added to their already massive long side. Both parties can’t be right as they contradict each other.

Last week spikes were starting to form, which are sell signals from my perspective.  I think gold is fooling us, as no other gold-related asset class like GDX could keep up to the metal.

If the Primary degree “B” wave top is in, then investors will suffer serious losses if the stay. Gold has already crashed $50 last week, which could be the start of a very bearish run.

When we look at GDX, we can see that it’s being left in the dust when comparing it to gold. We have resistance going back to the 2013 peaks, with an open gap just barely getting closed off.

Draw another line from the 2016 peak to our present 2019 peak, we can see a massive H&S. In a very bullish market, the right shoulder will just correct, and then break out again, but no such pattern will happen if a bigger bearish move is already in progress.

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