Gold Permabears Never Learn, Nearing Extinction

It appears the gold rocket launch is underway, which of course means that gold permabears will soon go into hiding. Was it really only 10 days ago that weak hands were panicking; Dennis Gartman was saying he was no longer a gold bull; and deflationists took center stage?

Intermediate term bottoms in gold always “feel” the same. Not only do you need a sleep-inducing period of consolidation followed by a steep sell-off, but you need sentiment to turn decidedly sour. You can always spot bearish sentiment through certain key words. These key words are: gold bubble; Robert Prechter; CNBC; gold bubble; deflation; gold bubble; shorting gold; gold bubble; “stupid” gold bugs; and of course, gold bubble. Come across these words enough times and you know a bottom is at hand. Get ready to back up the truck like I did when I said to embrace the sell-off in gold. At the time I said:

To me, the current sell-off in gold is reminiscent of the sell-off in stocks 3 weeks ago. While bears were blindly and recklessly going short, the smart money was sitting patiently with their fingers hovering over the “buy” button.

Based on the aforementioned, is it time to buy?

Shorting a bull market is the stupidest thing you can do as an investor. You are swimming against the tide and making investing a lot harder than it needs to be. The second stupidest thing you can do is lose your long positions in a bull market because you panicked.

At the end of the day there are really only two kinds of investors: the smart money and the dumb money. The dumb money always hands over ownership of shares to the smart money at major bottoms. The dumb money is scared of adding in a correction. The dumb money always chases tops.

The smart money understands the relationship between price and value. The smart money is patient. The smart money understands that the biggest profits in bull markets go to those who wait.

This bull market has years to run. Skeptics will be shorting this market and losing money for the next 5 years just as they have the past 10 years. Don’t complain, just thank them for giving you the opportunity to accumulate. These same investors will be buying from you at much higher levels. Eventually I will join the bears and short the gold market with conviction, but it is not time yet.