Precious metals peaked earlier this year and have since ground through a dull, downward stretch that has pushed investor sentiment to extreme bearishness. But extreme bearishness is its own kind of signal, and according to the Kobeissi Letter, which tracks positioning and technical extremes, gold and silver have reached deeply oversold, crowded-short territory. Such conditions have historically preceded sharp rallies.
Meanwhile, veteran trader Francis Hunt has turned bullish. Deep bearish sentiment had little impact on his thesis for fiat and debt-based collapse.
Signs of Exhaustion
Start with the miners. About 92% of stocks in the VanEck Gold Miners ETF (GDX) trade below their 50-day moving average, the highest share since late July, after the figure jumped 80 percentage points in just 21 sessions, according to the Kobeissi Letter. Some 90% sit below their 200-day average, a three-month high.
Similar setups in March and December 2024 preceded one-month GDX rallies of 21.5% and 15.4%.
"History suggests the selloff in gold miners is nearing exhaustion," the newsletter said.
Silver looks equally washed out. Its three-month put-call skew has climbed 10 points in four weeks to -3, the highest since early July. Over the past year, it has been higher only 2% of the time.
Hedge funds and commodity trading advisers sold $2.2 billion of silver futures in the three weeks through Oct. 13, cutting net longs to $1.7 billion. That's the lowest in at least two years, down from $8.5 billion in December 2025.
Daily gold price vs. GDX, Newmont and Agnico Eagle; Year-to-date; Source: TradingView
While media outlets keep reporting on China's appetite for gold, which Goldman Sachs estimates is higher than reported, investors can observe institutional interest by tracking equity exposure.
Plenty of domestic institutional money has mandates. Portfolio managers who manage billions typically have restrictions on security type and minimum size. If they're restricted to large-cap equity only, options for precious-metal exposure shrink quickly.
Thus, it's interesting to spot equity divergence against underlying commodity prices. The August gold rally is a clear example.
While gold didn't get near its January all-time high, Newmont Corporation (NEM) hit a fresh high and remains up 7.56% year-to-date, far outperforming the metal price. This move suggests equity-mandated institutional money may be seeking sector exposure by buying the largest available company.
Why Hunt Went Long on Gold
Hunt, who closely watches the gold-to-silver ratio, noted that it completed a third impulse higher to around 72, and he expects the pattern to break down in silver's favor.
He also argues gold's bear phases are getting shorter: about 20 years (1980-2000), then five (2011-2016), then two (2020-2022).
"Each time it's got smaller," Hunt said. "I don't think you need 2 years."
His main catalyst is a Western sovereign-debt "doom loop." U.S. 10-year yields have climbed from about 4.18% in February to above 5.1%, on a path he says "will take you through 6%." Rising yields usually weigh on metals that pay no yield.
But Hunt expects a "flippening moment" when contagion in the bond market pushes investors toward protecting their capital.
"It's no longer about return on capital, it's return of capital," he said.
Physical gold "has no liability associated," Hunt said, and holds its value against what he calls "monkey money" fiat. Eastern demand adds a floor: "China will buy up everything you sell," he concluded.
