Enthusiasm has returned to the gold market--though not for a key group. Commercial participants, considered the "Smart Money," are now positioned at the most bearish level in nearly thirty years of data. Over this nearly 30-year period, when the Commercial participants have been this bearish, the price of gold has fallen by more than a 10% annual rate.
Furthermore, the price of gold has had a strong seasonal tendency to rise through the late summer into September. That period is now over.
Third, I suspect that many gold enthusiasts are expecting central bankers around the world to spread liquidity around the world, boosting the prices of assets, particularly gold. That already is widely expected.
So to those readers who have the impulse to jump into the gold market after its recent double-digit rebound, I urge you to reconsider.