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(Source: Daily Sentiment Index Data, Author’s Chart)
As shown in the chart above, bullish sentiment for silver has fallen off a cliff in the past six months, descending from single day readings of more than 90% bulls in late February to a reading of barely 10% bulls on Wednesday. This exodus from the bull camp is a great contrarian indicator, with silver typically finding strong buying support on further weakness when readings dip to these depressed levels. As the chart above shows, this plunge in short-term sentiment has pushed the long-term sentiment moving average for silver to its lowest levels in years, with a current reading of 24%. This is the worst reading since September 2018, which ended up marking a bottom for silver. While silver did fall another 4% after hitting a reading of sub 25% bulls on its long-term moving average, the metal was 9% higher over the next six months and 24% higher just 12 months later. This represented an attractive forward 12-month return drawdown to forward 12-month return of 6 to 1.
