Gold bushwhacked the bears last week. It’s even got gold bugs talking about gold stocks … again.
After breaking gold bugs’ hearts by plunging to a new low for the year on Thursday, gold violently reversed. Measured by the CME floor close, the benchmark gold contract GCM2 -0.57% gained $38.30 on the day. It followed up on Friday by adding another $17, for a two-day gain of 3.31%.
The NYSE Arca Gold Bugs Index XX:HUI +0.21% jumped 5.29% in these two days.
Gold stocks’ outperforming the metal is significant, because they have been atrocious this year. As of Friday’s close, HUI was down 20.5% on the year, while gold was actually up 1.4% on the year. Just a restoration of late 2011’s multiples could produce serious gains.
If gold’s reversal sticks, it will be a triumph for the contrary opinion sentiment indicators. Nothing else had been offering any comfort.
The Hulbert Gold Newsletter Sentiment Index has been negative for a record 29 days. The far-sighted Australian bullion commentary The Privateer thinks something really significant has happened.
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