Pessimism on gold is so extreme that sometimes even the bears worry it might be overdone. Today the price jumped a little more than 1 percent after news hit the wires that was perceived to be bullish: Moody’s Investors Service reported that U.S. policymakers must do something about the government debt to avoid a rating downgrade this year.
Contrarians see today’s bearishness as a bullish sign, reasoning that once almost everyone who used to be a bull has become a bear, gold has nowhere left to go but up. That’s why they’re called contrarians. It’s also what happened in November 2008, says Dave Lutz, a precious-metals analyst at Stifel, Nicolaus in Baltimore. As negative sentiment peaked, gold began a rally that took it from $800 an ounce to more than $1,800………………………………..Full Article: Source