I had the chance to reconnect with one of the world’s rising stars in the gold market, Ronald Stoeferle, managing partner of Incrementum AG, and publisher of “In Gold We Trust”—the world’s definitive annual report on gold.
During the interview, Ronald indicated that in researching this year’s updated report (released last week), he discovered staggering evidence that the best-informed traders in the world are now positioned for higher gold prices. He further added that based on history, the extreme bearish sentiment in the market now carries “the recipe for a pronounced rally.”
From Tekoa Da Silva, Bull Market Thinking:
In discussing the most shocking piece of information discovered during his research for this year’s report, Ronald noted that, “If you read into the COT report…the commercial hedgers reduced their net hedges (which is the net short futures positions) by 84%…[this indicates] the largest, most deep-pocketed and best informed traders—have positioned themselves for higher gold prices…[and] in general I think you always have to position yourself with the commercials, because in the long term they are always right.”
When asked about the extreme bearish sentiment in the market at the moment, Ronald said, “It seems that the bulls have [completely] thrown in the towel…and that’s also confirmed by most of the sentiment indicators…We’ve seen most of the large investment banks (Goldman, Societe General, UBS, Morgan Stanley)—they’ve all turned to the bearish camp. They act very pro-cyclical (as always), and they raised their targets for the price of gold in 2011. Nowadays they’re in the bearish camp…[so that's] a sign that we’re already in a very mature part of this downtrend.”
With respect to the few bulls left in the precious metals space, Ronald noted that, “If you’re bullish on gold at the moment you’re quite a contrarian, and if you’re bullish on gold mining equities, that’s probably the most contrarian call in the market…and that makes me confident, because from a fundamental point of view—I don’t see any reasons to become bearish on gold.”
As a final word to investors who’ve all but forgotten systemic risks in the face of a rising stock market, Ronald urged listeners to, “Have faith…hope for the best—but [also] prepare for the worst.”
This was another powerful interview conducted with one of the world’s rising young stars in the gold market. It is required listening for serious investors and market students.
To listen to the interview, left click the following link and/or right click and “save target as” or “save link as” to to your desktop: