Silver and gold have hit a new low for the year during December in each of the last five years. They are on track for repeating their journey this year if we are to believe sentiment matters. And I do.

Two measures allow us to gauge sentiment. My favorite is the DSI or Daily Sentiment Index put out by Jake Bernstein. It’s more valuable than cheap. One good trade would more than pay for six month’s service. If you want to see how accurate is it, on December 17th of 2015, the day of the low in gold, it was 8, the low for the year. On December 15th of 2016, the day of the low in gold, it showed a value of 4, also a low for the year.

For silver in December of 2015 the DSI indicated a value of 8 also on the 17th of the month even though silver spiked slightly lower in late January of 2016 for a single day. In short, the DSI marked the low for both metals.

My other favorite indicator of sentiment while free isn’t as valuable as the DSI or as sensitive an indicator. It only comes out once a week and only reflects values for the prior Tuesday. In short, the measure is both dated and not necessarily sensitive. It also requires a lot more understanding which few investors, indeed few letter writers have. That would be of course the Commitment Of Traders or the COTs put out by the CFTC.

In my view, most people tend to look through the wrong end of the telescope when discussing the meaning of the numbers. To keep it simple, there are two main categories that matter, the speculators and the commercials. Those writing or commenting about the meaning of the COTs inevitably talk about what the commercials are doing and that reverses the logic of what is actually happening.

Contrary to the PermaBulls who need to fill your fantasies in order to stay in business, the commercials are both producers and consumers. For gold and silver, they would be mines on the short side and jewelry manufacturers on the long side. In theory in commodities the commercials should show neutral values but for gold and silver, they are most always short since mine financing often requires forwards sales for years in the future while consumers are more short-term concerned.