Sometimes the crowd gets it right…
Contrarian investing is a powerful tool. Often, the consensus view is wrong, and the masses are all making the same mistake. When we learn to identify those setups – and invest accordingly – we can sniff out incredible opportunities that everyone else is missing.
It’s not foolproof, though. At times, the crowd might be right instead…
Or it might take so long for the contrarian view to work out that it may as well have been wrong.
That’s the situation with one precious metal in recent years. Prices crashed… and then crashed some more. Along the way, investors became the most bearish they’d ever been before – and then, they got more bearish.
The crowd has been right so far. But now, sentiment is at its most bearish level yet – right as prices are beginning to reverse. And as I’ll explain, history shows this precious metal could double as a result.
This situation isn’t new. It has been underway for years. In fact, we discussed it here in DailyWealth last month.
I’m talking about palladium, an often-forgotten precious metal.
Palladium doesn’t have the same name recognition as gold. It’s mostly an industrial commodity. You probably don’t think about it very often. But the metal has been on a wild ride over the past few years…
It soared nearly 600% from its 2016 bottom to its 2022 high. Gold was up just 89% over the same period.
Clearly, though, palladium got ahead of itself during that boom. The metal has fallen as much as 73% since the 2022 peak. And now, investors want nothing to do with it…
We can see this by looking at palladium’s Commitment of Traders (“COT”) report. This measure looks at real-money bets in the futures market. And the COT for palladium has been dropping lower and lower in recent years. Take a look…
Again, this has been happening for a while now. The COT has hit new “worst ever” hated levels repeatedly. And it just hit a new low earlier this year.
More important, though, these setups have led to massive gains for palladium over the years. You can see it in the table below…
Contrarian investing doesn’t always work. But the results are darn good when it does. And in the case of palladium, we’ve seen prices more than double after hated setups like today’s.
It’s worth noting that palladium hasn’t had a major rally since the 2022 crash. And sentiment has kept hitting worse levels in recent years.
Now, though, we could finally be on the cusp of a larger move higher for two reasons…
First, the COT has started to rally from the February lows. It has broken above the lows of 2023. That means sentiment could be slowly turning around.
Plus, palladium prices are rising. They’re up 10% off their February low.
We haven’t seen palladium prices and sentiment rebound at the same time like this since the crash began in 2022. If this is the start of a true reversal, the metal could easily double from here.
After a multiyear bust, palladium is finally showing early signs of life. So if you’re interested in a contrarian opportunity, this precious metal is worth considering right now.
Good investing,
Brett Eversole
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Source: Daily Wealth