How can you tell when you’re at the bottom?
Price movements alone don’t give you much information. After all, prices can always go lower.
But trader sentiment is one way to gauge when you’re close…
Sentiment is typically measured using a mix of factors, like put-call ratios, volatility, price breadth, volume, etc. Readings range from 0-100, with anything below 30 considered to be extremely fearful, and anything above 70 to be extremely greedy.
Sentiment matters because it reveals how market participants are behaving, and at the extremes, there’s really only one direction that sentiment can go, and price along with it.
Take a look at this table from Sentiment Trader showing the last 8 times that sentiment at recent levels (below 30) has resulted in higher gold prices a year later 100% of the time.
H/T to Sentiment Trader for this analysis, published on June 30, 2026.
If you look across the table, you can see that prices frequently dip slightly lower over the following week, but that for every longer period, the odds are in your favor if you bet against low sentiment.
At a year out, the average return for gold a year after the low sentiment we’re seeing right now is 16%.
The lowest return a year later was 6%.
I’m focusing on a year because it’s the longest available period from this analysis, and also because you really should be trying to build gold positions that prosper over years, not months.
There are plenty of people who day trade stocks. 90% of them lose money. Guessing at short-term price movements is basically impossible.
If your investment thesis is likely to get completely wiped out by news that could come out in a week from now, you don’t have a defensible thesis. You have a low strength guess.
For our gold stocks: we have a long-term view. The dollar is currently in a strengthening pattern. That strength weakens the price of gold.
But it’s a temporary move. You can ask even the most bullish dollar holder alive right now where it’s headed over the long term. They’ll tell you it’s going to be worth less a year or five or 10 years from now.
The absolute BEST-CASE scenario for the dollar is 2% devaluation per year. That’s what the Fed is loosely targeting. As we know, they frequently blow past that mark – as they did for the 12 months ending in May 2026. The BLS reported inflation of 4.2% for that period.
New Fed Chair Kevin Warsh was brought in by President Trump to basically gut rates if at all possible. Now, with inflation coming in hotter than expected, there’s a real question about whether Warsh will raise rates to cool things off. The market certainly seems to believe he will.
But the sentiment of gold traders is telling us something a little more interesting about where things will be longer term.
A bet on higher gold from here is a contrarian position – which means it’s probably the higher probability move.
Get started with your contrarian gold play by heading here: my American Gold Retirement plan.
Have a great 4th of July!
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio
