Textbook Reversal – Private Investor Sentiment on Gold & Silver Jumps

Posted by BullionVault

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Gold & silver slump then jump

BULLIONVAULT users added more gold to their holdings last month than any time in a year.

Indeed, the people choosing to buy gold in February outnumbered sellers by the greatest margin since April 2013.

That’s clearly shown on our new Gold Investor Index, now detailed in full on GoldNews here. 

Check the charts to see the dramatic turnaround from New Year’s poor sentiment…the weakest in a half-decade. 

Same story in silver. Our new Silver Investor Index…again tracking the balance of buyers over sellers on BullionVault, and thus judging sentiment amongst the world’s largest single pool of private bullion owners…jumped near a 2-year high last month after drifting towards record lows in January. 

Just more straws in the wind? Perhaps. But carry on like this, and precious metals investors will soon have enough to carpet a small rabbit hutch. 

Because it isn’t only private investors using BullionVault who are changing behaviour. 

Hot-money positioning in gold futures and options, says Australia’s ANZ Bank, “currently suggests that gold is not all that unloved.” Because while the latest data show bullish traders cutting their bets last week, there was “very little addition” of new bearish bets that prices might fall. 

That makes a big switch from the way hedge funds bet against gold in 2013 and 2014. 

Meantime in exchange-traded trust funds… a handy route for US money managers to buy gold-price exposure without owning metal…January saw the fastest growth since mid-2010 as prices rose. 

But on February’s price drop, “investors held onto positions,” notes Jonathan Butler at Japanese conglomerate Mitsubishi, “rather than liquidating holdings in line with price declines, the more usual behaviour.” 

Yes, the giant GLD trust saw a big outflow Monday, the first trading day of March. But the big silver trust…the iShares SLV…saw more money come in. And extremes in market sentiment take time to reverse.

Gold dropped 40% from 2011…and silver prices fell 70%…to the lows seen late last year. The turnaround has to start somewhere.

And starting from the New Year’s very weak levels, precious metals have found more solid ETF support, less bearish hedge funds, and more bullish private investors

Adrian Ash
Head of Research, BullionVault

Key data and market events, times in GMT (CET-1, EST+5):

 

  • Monday US manufacturing expanding quickly, but construction slumped, personal spending fell, inflationbadly below US Fed’s target in Jan…
  • Overnight Japan’s monetary-base growing less quickly, swells a mere 37% per year in Feb…
  • 03.30 Reserve Bank of Australia holds rates at 2.25%…
  • 07.00 Germany retail sales for Jan. revised sharply higher…
  • 08.00 Spain added jobs in Feb, defies analyst forecasts…
  • 09.30 UK construction activity jumps back to pre-Crash levels (Markit/CIPS PMI)…
  • 10.00 Eurozone factory-gate prices revised sharply lower for Jan, fell 3.4% annually…
  • 13.30 Canada’s GDP revision for end-2014…
  • 15.00 US economic optimism (IBD/TIPP)…
  • Tonight Australia’s 2014 GDP; China services-sector growth for Feb…