Figure 1 is a weekly chart of gold. In the lower panel is the amount of assets in the Rydex Precious Metal Fund.

Figure 1. Gold v. Assets Rydex Precious Metal Fund/ weekly

At point 1, which was in 2002 and the bottom for gold, the amount of assets in this fund started to expand. At point 2, which was in mid-2003, the amount of assets in this fund expanded to new extreme levels. In my experience, this is typically what happens with data points at important secular turning points. Old extremes become useless and new levels are set.

Since that time in 2003, the amount of assets has been in a range. The current value (gray oval) is still below the mid-point of that range, and my interpretation is that the Rydex investor has yet to buy into the move in gold. From a contrarian point of view, this suggests higher prices for gold.

Past xxtreme values in the amount of assets in the Rydex Precious Metal Fund are noted with the red vertical lines. Interestingly at point 3, the extreme high in price back in 2008 was not heralded by an extreme high in the amount of assets.