Hulbert Gold Newsletter Sentiment Index: Gold’s Rally Will Continue

Hulbert Gold Newsletter Sentiment Index (HGNSI) is 40.3% currently versus 67% in late July. Mark Hulbert, the editor of the Hulbert Financial Digest, writes regular columns about his investment strategies and opinions for MarketWatch, Sunday New York Times, Barron’ and the Journal of the American Association of Individual Investors. He wrote an article yesterday, pointing out that the gold price is close to the level in late July, but the degree of excitement of the market is reduced by half (based on data from Hulbert Gold Newsletter Sentiment Index). Therefore, he believed that the gold price would continue to climb at least in the short term.

In late July, Hulbert talked about the gold market. He said that people were no longer worry about the gold market, and they were excited and enthusiastic instead. Therefore he thought gold’s run was almost over at that time.

The gold price suffered huge losses in late August. It climbed to a peak of $1,929 per ounce on August 23rd, but dropped to $1702.80 after two trading days. The jump in two trading days shocked a certain number of people who were bullish about the gold at that time. They suddenly turned to become pessimistic about the market. However, from a contrarian point of view, this is a sign of bullishness. As a result, the gold price has returned to not far from the high point in August, but the sentiment in the gold market still remains depressive.

Hulbert Financial Digest, which since 1980 has been tracking the performance of investment advisory newsletters, tracked the average recommended gold market exposure among a subset of the shortest-term gold market timers and measured that by Hulbert Gold Newsletter Sentiment Index (HGNSI). HGNSI is 40.3% currently versus 67% in late July, when the gold price is about $300 lower per ounce than the price now. Although the gold price is about 18% higher, the investors are only 60% as bullish about the market. Therefore, Hulbert was bullish about the gold market: he believed that the gold price was very likely to keep going up in the short term.