2018 hasn’t been kind to precious metals…
Gold’s down 4%… Silver has fallen 6%… And platinum is down a full 10%.
In the case of one of these metals, we could see huge gains when prices reverse. The reason is simple…
A certain group of investors hates this precious metal today. Sentiment is more negative than it’s ever been. And that means the potential upside could be massive when this situation turns around.
Let me explain…
Want to make money in the markets?
Then buy what others can’t stand. Buy what folks absolutely hate the idea of owning.
Think gold in 2003… or U.S. stocks in 2009… or Chinese stocks in 2016.
If you can consistently buy what others are afraid of buying, you’ll probably make a lot of money.
That’s the situation we have in platinum right now… Futures traders have hit record bearishness on platinum based on the Commitment of Traders (COT) report.
The COT report gives us real-time insights into what futures traders are doing with their money. We can see if they’re bullish, bearish, or somewhere in between. And when futures traders all agree, the opposite tends to occur. So it creates a strong contrarian signal.
Right now, futures traders are more bearish on platinum than they’ve ever been. Take a look…
This low reading means futures traders are betting on lower platinum prices. And it’s no surprise that’s what they’re doing right now… Betting against platinum has been the right move in recent years.
The metal is down around 40% over the past five years. And it recently hit new multiyear lows.
Can the downtrend continue? It sure can – in the short term. But the COT report shows us that more folks are bearish today than ever before. And that means a rally is likely sometime soon.
This rally could begin in three weeks or three months. We can’t know exactly when it’ll start. But it will happen. With futures bets this bearish, there simply aren’t many more folks out there to push prices lower. The rubber band is stretched… and it’s just a matter of waiting for it to snap back.
More important, we’ll almost certainly see huge gains when that happens. The last time sentiment was close to this negative was in late 2008… just before a major platinum rally. Prices more than doubled in less than three years.
We can’t know for sure if prices will double from here. And we can’t know exactly when the uptrend will begin.
We do know that futures traders hate platinum now more than ever. And that means we’ll likely see big gains once the reversal takes hold.
Source: Daily Wealth