APR 20, 2018
When you seek out and consume a lot news about precious metals investing on a daily basis, it’s easy to forget that mainstream investors tend to completely ignore the space until there is a major move that puts gold or silver in the spotlight.
And then, lemmings that they are, they pile in one after the next, paying ever-increasing prices for commodities the savvy investor stocked up on while everyone else was busy with FANG stocks. Don’t wait for the run. Don’t wait for the rush. Maximum profits are made by getting in before the stampede.
Gold remains largely forgotten, off the radars of most investors. But that’s likely to change soon as this leading alternative investment is nearing a major bull breakout. Once gold climbs to decisive new bull-market highs, sentiment will turn and investors’ interest will surge. Their resulting buying will rapidly drive gold higher, attracting in more capital inflows. Gold is only a couple modest up days away from that key breakout.
Universally in all markets, traders’ psychology is completely dependent on price action and levels. When prices are high and rising, speculators and investors alike eagerly buy in. They love chasing winners, so buying begets buying.
With capital inflows following performance, investments that aren’t high and rallying naturally see waning popularity.
That’s the story of gold over the past couple years or so. Gold’s last new bull-market high came way back in early July 2016, when it hit $1365. That was 21.3 months ago, which may as well be an eternity in terms of sentiment. In most traders’ minds, gold has effectively been dead and buried ever since.
While contrarian investors always follow gold, most mainstream investors don’t. They only get interested when gold is powering up to major new highs.
This psychology holds true everywhere in the markets, it’s certainly not unique to gold. A handful of mega-cap tech stocks have soared since Trump’s election win in November 2016, but other mega-cap tech stocks have lagged far behind. Traders always pursue performance.