At point 1, which was in 2002 and the bottom for gold, the amount of assets in this fund started to expand. At point 2, which was in mid-2003, the amount of assets in this fund expanded to new extreme levels. In my experience, this is typically what happens with data points at important secular turning points. Old extremes become useless and new levels are set.

Since that time in 2003, the amount of assets has been in a range. The current value (gray oval) is still below the mid-point of that range, and my interpretation is that the Rydex investor has yet to buy into the move in gold. From a contrarian point of view, this suggests higher prices for gold.

Past xxtreme values in the amount of assets in the Rydex Precious Metal Fund are noted with the red vertical lines. Interestingly at point 3, the extreme high in price back in 2008 was not heralded by an extreme high in the amount of assets.

By Guy Lerner

http://thetechnicaltakedotcom.blogspot.com/

Guy M. Lerner, MD is the founder of ARL Advisers, LLC and managing partner of ARL Investment Partners, L.P. Dr. Lerner utilizes a research driven approach to determine those factors which lead to sustainable moves in the markets. He has developed many proprietary tools and trading models in his quest to outperform. Over the past four years, Lerner has shared his innovative approach with the readers of RealMoney.com and TheStreet.com as a featured columnist. He has been a regular guest on the Money Man Radio Show, DEX-TV, routinely published in the some of the most widely-read financial publications and has been a marquee speaker at financial seminars around the world.

© 2009 Copyright Guy Lerner - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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