After last week’s surge in gold, silver and the shares, SentimenTrader just issued an extremely important update on the gold and silver markets as well as the mining shares.
From Jason Goepfert at SentimenTrader: “Nearly $500 million has flowed into gold miners over the past week. That’s not a large amount of money but it is a relatively small industry. The GDX fund has taken in $370 million (see chart below).
…and the junior miners fund GDXJ has pulled in $110 million (see chart below).
Both inflows are among the largest in the past three years. Fund flows are imperfect guides but can be useful and both funds have responded fairly well to extremes in flows, in a contrary manner. It suggests a mild headwind for the miners in the coming week(s).
King World News note: I would just add to what Jason has said by noting that sentiment for silver has not yet reached the level of “Excessive Optimism” (see 25-year silver sentiment chart below).
King World News note: It is also important to note that sentiment for gold has also not yet reached the level of “Excessive Optimism” (see 25-year gold sentiment chart below).
King World News note: If you look closely at the chart above, the Gold Optix spent a significant amount of time in the “Excessive Optimism” levels during the bullish advance from 2001 – 2011. Yet at the beginning of this cyclical bullish phase of the secular bull market in gold, sentiment still remains somewhat subdued. But that’s what bull markets do, they “climb a wall of worry.”
It would appear that the endless talk about the massive commercial short positions in both metals coupled with the bullish advance coming on the heels of a brutal 5-year cyclical bear market is keeping a healthy level of “fear” in the early stages of the newest leg of the bullish advance. So it will be very interesting to see how gold and silver trade from current levels in the days and weeks ahead.
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