A Warning From An Important Gold Investment Sentiment Indicator

Fri, Mar 8, 2013

Gold Daily Sentiment Index Report

This is not a good sign for the future of gold prices.

One of the most important aspects of any investment trend is investor sentiment. If sentiment rises, demand rises, and prices rise. It’s a virtuous and extremely profitable cycle.

Gold Investment SentimentThe inverse of the virtuous cycle is equal in its viciousness. Because when sentiment turns, the results are painful and costly.

More importantly, it takes a very long time to turn back around and for an asset class to regain the trust of investors and start to rise as consistently as gold has over the last decade.

That’s why one of the most recent Gold Investment Sentiment Indicator of demand for gold investment should be a warning for investors hoping for a short-term rebound in the price of gold.

The ad below is from Kitco, one of the largest precious metals bullion dealers in the world:

The ad is for the American Buffalo coin which is pure 24kt gold. The ad contains a special discount on U.S. Gold Buffalo coins for sale at just 3.95% over the spot price of gold.

Kitco is not alone either in offering some of the lowest prices for gold bullion to attract buyers. The U.S. Money Reserve appears to be a bullion dealer that has recently started a fairly aggressive advertising campaign for U.S. Gold Buffalo coins. The company claims they’re selling them “At Cost” in this ad for gold bullion coins. The company’s advertised “at cost” price is $1645 which is a mere 4.4% premium over the spot price of gold.

gold daily sentiment index

These two ads signal a sharp turnaround in the costs of these coins. Two years these coins were in such high demand that they were selling for at least 7% over the spot price. And your editor saw premiums as high as 12% over the spot price. In many cases, even with the elevated premiums, U.S. Gold Buffaloes were sold out and you’d have to wait months for delivery.

That’s all a bad signal for the near-term price of gold. After all, the key part of any bubble is demand from individual investors surging during the final leg of the bubble. This creates the euphoric price spike that marks the top and end of every bubble. It’s when the smart money is selling to the dumb money herd.

This will happen in gold too, eventually. But given the indication of demand for Gold Investments from the discounts offered by gold bullion suppliers, the next stage of the rising gold bubble is going to be a very long ways off. Invest in gold accordingly.

For More Information: Contrarianinsights.com

Good investing,


Andrew Mickey
Executive Editor, Contrarian Insights

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