Jason Ruspini:

There is no blind faith involved. A lot of trading is about heuristics and when multiple oscillators and sentiment indicators get to extreme levels, it’s prudent to lighten up. When that happens, I agree that it’s actually a crowded trade — as opposed to the “crowded trade” chorus of everyone not in the trade.. itself a rather vocal crowd. But if you’re still long, this strategy isn’t “dangerous” if gold keeps going up.

With the fundamentals of gold, I will actually lean on some common arguments: the history of money, the growth of fiat money supply relative to gold, the slowing supply of gold via mining, the growing demand from central banks (formerly the growth of total fx reserves vs. gold reserves) — and the fact that dollars have zero yield. If dollars were giving me real yield, I might be ready to jettison gold. This is why I was skeptical of the number given here:
http://www.midasoracle.org/200…..ment-27434

Sentiment and price-normalizing oscillators inherently tend to be short term and I don’t know if you’re going to find a lot of value in differentiating between 90% vs 95% vs 97% readings here. Without looking at specific numbers, any reading above 90% suggests a pullback of 5+% to me in the next 2-3 weeks.. maybe even down to the 1050 level, around where the Indian Central Bank just bought 200 tonnes. At that point the oscillator may be back in the 80s or 70s, with the rate picture basically unchanged.

And gold of course has some practical uses, though they may be irrelevant at the margin.