Is It Peak Pessimism When Even the Gold Bugs Shy Away from Gold?

Last week, I attended the Toronto Resource Investment Conference, which is organized by Cambridge House International. This annual conference features companies involved in the resources sector, mainly gold bullion and silver explorers and producers.

To say the very least, the sentiment at the conference was dismal, and the “hope factor” just wasn’t there. After attending this annual conference for a few years, you tend to get an idea about what you will see and what kinds of opinions you will hear. This time was different. Attendance was way down, as were the number of gold companies exhibiting.

Those who pitched gold explorers, and gave their tips, were saying, “But you have to be really careful.” The “feeling” was gold bullion producing companies, be they senior miners or junior miners, face an anemic future ahead. And for those companies that explore for the precious metal, the “feeling” was that they will have trouble raising money.

But one thing all the speakers did agree on was that demand for the precious metal is increasing. I heard China is buying gold bullion; demand for the precious metal in India is robust; production at mints around the world is in overdrive mode; and so on. This is what I have already been writing about in these pages.

It was unusual to see the regular gold bugs actually being cautious on where the gold prices are going next. They were very clear that the damage that took place in the most recent sell-off would take some time to recover. They were concerned the price of gold bullion is being manipulated.

To me, all of this is negative sentiment—something I haven’t seen in years—is a bullish signal for gold prices. Attending the conference reminds me of what the “buy when there’s blood on the street” saying actually means.

Yes, it’s a time of elevated pessimism for gold bullion. Can it get worse? After all, we are hearing once again how The Goldman Sachs Group, Inc. (NYSE/GS) is calling for lower gold bullion prices ahead—even saying it could fall below $1,000 an ounce.

When I look at gold prices, I don’t look at daily fluctuations; I look at the big picture. When I do just that, I see the precious metal is still trending higher, as you can see in the chart below.

 Gold-Spot Price-ChartChart courtesy of

I remain bullish on gold bullion. I’m very interested to see if Goldman’s recent “sell recommendation” on gold pushes the metal’s price down again. And I like all the growing negativity surrounding gold bullion. Are we getting to the point we were at in 2001, when bearishness for gold bullion reigned? To me, these are all bullish signs.

What He Said:

“I see a deal when it’s a deal. And right now there’s a good ‘for sale’ sign flashing on gold bullion and gold producer shares. In fact, after peaking at the $690 an ounce level earlier this year, gold could be a bargain at its current price of around $650 per ounce. As a reader, you are undoubtedly aware of my negative stance on the general stock market and the U.S. economy. As the economic problems that continue to brew in the U.S., as these problems develop into others, and as they are finally exposed, what other investment but gold will worldwide investors turn to?” Michael Lombardi in Profit Confidential, March 14, 2007. Gold bullion was trading under $300.00 an ounce when Michael first started recommending gold-related investments. Many gold stocks recommended in Michael’s advisories gained in excess of 100%.