Dennis Gartman, of the Gartman Letter – and who recently established a hedge fund, River Crescent, to put to work the buy and sell recommendations he publicises in his daily note – issued an interesting view on gold on Friday.
First, he presented the following chart of spot gold:
To which he commented (our emphasis):
The trading range is drawing down tighter and tighter as the bullish and the bearish forces face each other in the trenches at ever closer range. Soon one side shall have the other on the run; we’ll join the winning side, allowing others to be braver than we.
According to Gartman, therefore, there’s a bit of a gold war being staged between some sizable but unidentified forces. This can be seen by the fact that gold held very, very steady on Thursday, including during the period when crude, grains and even share prices – for the briefest of moments – came under pressure.
As he commented:
Through it all, gold held steady, and gold priced in currencies other than the US dollar held steadiest of all. As we write, spot gold in US dollar terms is trading $950, and as the chart of gold in US terms at the upper left of p.1 this morning shows, there has been someone or “something” willingly selling gold at progressively lower dollar levels since early this month. They or “it” stopped gold firstly at $970; then again at $960; then again at $957 and again thus far this morning at $950. If $957 is taken out to the upside, we shall have no choice but to be very much impressed.
Which led Gartman to conclude on a somewhat bullish note:
More important than that, however, shall be gold in EUR and Sterling terms. In EUR terms, gold is trading €663 as we write and a movement upward through €668 would be even more impressive, and be of greater importance, than the movement through US$957 noted just above. In £ terms, the trend is even more definitively upward, and a movement upward through £586… it is trading £584 as we write… would mean that anyone short of gold in £ terms since June of this year is losing sizeable sums of money. Simply put, a real bull market in gold should take place in the terms of any and all currencies. That, we suspect, is about to happen.