The McClellan Market Report
Daily Edition (snippet)
Gold

McClellan Financial Publications, Inc
Written May 31, 2012
Posted Jun 2, 2012

The Daily Edition was prepared after the close of trading, Thursday, May 31, 2012

Gold and the mining stocks are still languishing. My hunch is that they are waiting for some sort of spark out of Europe to signal the bullion markets that a new rally is afoot.

The GDM Index has already rallied 14% off its recent low, but as of Thursday it is still 35% below last year’s high, which means it would need to have a 53% rally from here to get back to that prior high.

In spite of these bargain prices, investors are still eschewing gold mining stocks. The Rydex Precious Metals Fund remains at a low level for total assets invested into it. When this fund gets up above around $275 million, it says that people like gold stocks too much. When it gets down below around $150 million in assets, it usually signals a sentiment washout befitting an important bottom.

But on this trip down to low levels, this fund has stayed below $150 million for the longest time since the big low in 2003.

One might infer that it has stopped working, but the conclusion I take from this is that people have just sworn off investing in precious metals, in spite of all of the radio and TV commercials trying to convince all of us to invest in gold coins, etc. I see this as a big sign of a major low for gold prices and for mining stocks, just because of the message that people just don’t like them any more. At some point, they cannot like them any less, and can only like them more.

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Written May 31, 2012
Tom McClellan
Editor, The McClellan Market Report
email: tom@mcoscillator.com
website: www.mcoscillator.com
(253) 581-4889

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