Are Kitco gold experts contrary indicators?

In response to recent debate, we ask the titular question (data originally from this IKN post).

I don't think so, although there is a very slight trend to that effect.

To test the idea, we plot the Kitco bearish and bullish opinion percentages against the performance of GLD the following week.

First up--the bulls.

I've plotted it the same way as the last time, although perhaps an argument can be made that I should switch the axes. There is a slight negative correlation, which would favour Otto's assertion that the experts are contrary indicators. But with r = -0.113, it is a weak correlation. By comparison, the correlation between bullish opinions and the previous week's performance of GLD was above 0.7.

And now the bears . . .

This time there is a weak positive correlation (r = 0.17), which favours the contrary indicator idea (high numbers of bears are followed by higher gold price)

At least since the beginning of September, 2013 (at which point gold was about $100 higher than at present).

Then I tried increasing the difference--maybe those Kitco experts are contrary indicators for GLD behaviour farther in the future.

If we compare the performance of GLD two weeks after the experts' prognostications (i.e., GLD's performance during the second week, not over the entire two week period), we get a reasonable correlation (r^2 = 0.21) - but this seems to suggest that you could bet along with the experts as long as you delay a week. So the current bullish posture favours a gold decline not this coming week, but the week after.

Given that r^2 was about 0.5 for the lagging indicator, that is still the favoured hypothesis. So given Kitco's bearish stance, your best bet is still to go back in time a week and short gold.

It does occur to me that a longer series, that covers a period where gold was performing well over a sustained period, may give a different result.

You may have what it takes to be a Kitco gold expert!

I know you've always dreamed of it. But you are probably asking yourself . .  how could I ever develop the wisdom and insight to be a Kitco gold expert? It must take years . . . no, decades . . . of intense study to develop the necessary mental acuity.

Anyway, Otto at the IKN blog claims that the Kitco gold experts are as useful as monkeys with darts. I say they are less useful. Let's investigate, using the table of data helpfully posted at the above link.

The shotgun approach to gold forecasting

The red dots are a scatterplot of % of bearish experts vs the weekly performance of GLD; the blue dots are % bullish experts vs weekly performance. It looks like monkeys with a dartboard.

But when we compare the expert consensus against the previous week's behaviour of GLD, we see a different pattern. On the week following a falling price in GLD, most of Kitco's experts are bearish. When GLD rises, most of Kitco's experts become bullish the following week.

Kitco's experts are a lagging indicator.

If you want to make use of them in your investment planning, you should first invent a time machine . . .