The Hulbert Gold Newsletter Sentiment Index (HGNSI), a closely followed measure of investor views on the price of gold, tumbled to -13% as of last Friday.
The HGNSI – which measures gold timers’ recommended exposure to the yellow metal – fell into negative territory for only the third time this year. Each instance was “associated with important bottoms” in the gold price, according to HGNSI founder Mark Hulbert.
In addition, the HGNSI reached its lowest level since the depths of the financial crisis in the fall of 2008.
The negative reading indicated that gold timers recommended a net short exposure to the yellow metal, a relatively rare occurrence.
From a contrarian perspective – a view that Mark Hulbert frequently espouses – the severely low sentiment reading is a bullish factor. As noted above, on each prior occasion when the HGNSI fell into the red, the price of gold soon turned higher.
Based on the data, investors could certainly pick a worse time than now to buy gold.
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