GOLD/SILVER & MINING SECTION

Many of the retail traders who've been invested in gold over the last few years have sold out. This crowd loves to try and trade their investments, ie be bullish for the long term but look to sell short term tops in order to buy back at lower prices.

A strategy like this is very appealing if you've got the skill to trade. But you run the very high risk of a market running away from you whilst not being onboard.

Gold is also the market that everyone likes to call a top in. For every top caller there's only one person forecasting higher prices. So anyone mentioning the word 'bubble' just plainly doesn't know what he's talking about.

Proof That There's No Speculation

The US Rydex Group of funds have a Precious Metals fund which has seen the index it tracks (the XAU) rise by 40% in the last 10 months but this has been accompanied by a 15% drop in money invested, see the chart below.

And for those holding gold/silver shares that want evidence of a blowoff or real bubble should keep a close eye on the money flows into this fund. It looks like being a great contrary indicator if the price of gold and silver continues to rise.