Low Gold Sentiment Means......

"Gold lately has had about as much luster as a rusty tin can," wrote Time magazine -- in August 1976.

"After that article was published," EverBank's Frank Trotter reminds us, "the yellow metal rallied about 600% in the following four years. I tell you this story because investors' sentiment toward precious metals is also terrible today."

Look no further, says Frank, than the Hulbert Gold Newsletter Sentiment Index. "It's a survey that shows what gold newsletter writers are telling their subscribers. Right now the index is showing a reading of 31% net short, a historical record low since the inception of the survey in 1997. This means the average gold newsletter adviser is recommending that clients and subscribers short gold with 31% of their portfolio. 

"Since 2000," Mr. Trotter continues, "this index has registered a reading below 20% only three other times. The chart below shows the performance of gold since 2002 and the readings of the index. As you can see, gold had a huge rally on all three of those occasions. 

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