Precious Metals Sentiment 'Among the Worst Since 1990'

It's almost time...

After a seven-year bear market in the price of gold, it's nearly time to be bold and "back up the truck."

It's nearly time to go "all in" on precious metals.

If you know me, you know I don't usually say things like this – especially about gold and precious metals.

I just returned home from speaking at the "Super Bowl" of commodities investing – the Sprott Natural Resource Symposium in Vancouver, Canada. As you might know, two years ago at this conference, I announced that I had just sold all of my gold and gold stocks.

So what has changed in two years? A lot...

Two years ago, investors were extremely optimistic on gold – to a record degree.

To me, that was a dangerous sign. Nobody was left to buy. Everyone who wanted to buy had already bought.

Today, the story is completely the opposite...

My friend Jason Goepfert of SentimenTrader.com – who does the best work of anyone I know on analyzing investor sentiment – recently wrote that sentiment among precious metals today is "among the worst since 1990."

He also pointed out that "money managers are the 2nd-most negative on gold since 2006. The only time they were (slightly) less positive [was] a few weeks in late 2015/early 2016, right before the metal jumped 30% over the next six months."

That's the story on gold. But the other precious metals are similarly hated...

My colleague Brett Eversole recently wrote here in DailyWealth that platinum is now the most hated it's ever been.

So you might be wondering why am I NOT personally "backing up the truck" to buy – yet.

It's a fair question. For the biggest gains, we want to buy what's extremely out of favor, and hold at least until it's no longer out of favor. (As I've said for years, the biggest gains typically happen when things go from "bad" to "less bad.")

The only reason I'm hesitating today is the uptrend... In short, we don't have one.

Gold and platinum aren't showing any signs of life – yet – based on the trend.

When they do, it will give us a setup for an excellent trade, when you look at the potential reward versus the risk...

Normally in stocks, I like to set up a reward-to-risk ratio of at least 3 to 1. That means if I think my upside in the stock is 30%, and I set a trailing stop at 10%, then I have a reward-to-risk ratio of 3 to 1.

We may be able to do better than that in precious metals – once the time is right.

The time isn't right to push a big pile of chips toward precious metals just yet. I have rarely done this in my career. But I look forward to doing it – soon.

I urge you to start making some room in your portfolio for precious metals. I know I will...

Good investing,

Steve

Further Reading

"2018 hasn't been kind to precious metals," Brett Eversole writes. "But big losses sometimes set the stage for future gains." Learn more about the huge potential upside in platinum right here: One Reason This Precious Metal Is About to Soar.

"You can find assets that are trading at tremendous discounts – which can lead to life-changing gains," Kim Iskyan writes. Read about his on-the-ground experience with a market in crisis right here: Why the Best Time to Invest Is When It 'Can't Get Any Worse.'

Market Notes
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