"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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