Sentiment indicators are contrarian, meaning that when the majority of investors are bullish on the a market, it is bearish for that market. Most investors are aware of several sentiment indicators that relate to the stock market, but they may not be aware that there is a sentiment indicator for gold derived from the closed-end fund, Sprott Physical Gold Trust (PHYS). Let’s quickly review how mutual funds work. An open-end fund processes contributions and redemptions while the market is open. After the market closes, it calculates the net asset value (NAV) per share. Closed-end funds normally do not process new contributions and redemptions. Rather, their assets are fixed and they trade on the stock market like stocks. Because of this, their price can be bid higher or lower throughout the market day, and they can sell at a premium or discount against their NAV. On the daily chart below, we…
