by David Brady
Sprott Money
Sentiment is one of the best contrarian indicators there is, but it is just one of the tools that I follow as part of my data-driven process. That said, it works extremely well in the precious metals and miners space, because people who invest there—like those who follow Bitcoin—are extremely passionate about their positions for reasons that transcend just potential gains or losses. This typically leads to extreme bullishness or overexuberance at peaks as well as anger, depression, frustration, and finally apathy at troughs. Extremes in sentiment such as these reinforce the notion of “buy low, sell high”, the obvious but critical truth to trading and investing. As Warren Buffett aptly suggests, sell when everyone else is buying and buy when there’s blood on the streets.