Last week, Dennis Gartman, author of the eponymous Gartman Letter, caused a bit of a stir in the goldbug community when he suggested that gold’s sell-off on February 29 may have been connected to central bank intervention.
As he wrote in his March 2 note:
The market’s plunge may not have been solely the result of pure market forces, but may have been the result of a very real effort to “manipulate” the market lower … perhaps on orders of a central bank hoping to break the market in order to buy gold more cheaply after the surge of selling, or perhaps on the order of a government wishing to drive gold down for the “optics” of weaker gold prices.
A key goldbug thesis, of course, is that central banks have been suppressing the gold price for ages. The above hence resonated well with the community, leading some to embrace Gartman wholeheartedly into their flock.
Though that might have been a mistake.
On Wednesday, Gartman makes it very clear. He is not and never will be a goldbug.
We are not hard asset enthusiasts here at TGL. We are mercenaries, and gold is but a number dancing across a page that we can be bullish of when the trend is up and which we can be neutral of when the trend changes. We’ve no allegiance to gold and indeed we are agnostic, just as we’ve no allegiance to soybeans ot to shipping stocks or to copper or to farm land. There are times when one is to be bullish of each; there are times when one is to be neutral and there are times when one is to be bearish. As gold market “agnostics,” we are anathema to the “Bugs”.
They genuflect in gold’s direction; we merely acknowledge that it exists as a trading vehicle and nothing more. When we are bullish of gold we wish gold well, but acknowledging that that probably means we are something less than optimistic about the over-all economic circumstances of the moment. When are bearish… which are not; we are simply trending toward neutrality at the moment, long of gold only in non-US dollar terms.. we wish gold nothing other than ill while wishing for and expecting good, solid profit-creating opportunities for business generally.
The “Bugs” are always bullish of gold, touting that gold has zoomed from less than $300/ounce to $1800/oz. over the past several years, while we remember that gold fell relentlessly from $850/oz. to less than $300/oz. over the course of the previous twenty while stocks soared. The “Bugs” make no mention of that. We do.
There are times to be bullish; there are times to be bearish and there are times to just watch. “To every season” as Ecclesiastes… and Pete Seeger… tells us; and this is something the “Bugs” never seem to understand. We shall probably join the Bugs again eventually on the aggressive long side of gold but not right now. Further, rest assured that when we do we’ll not be embraced as the Prodigal Son returned, nor should we be. We shall instead be the Agnostic Son returned, ready always to grab our coat and hat and head for the door, hopefully un-noticed.
Not a goldbug. Got it?
Probability of central bank intervention against gold rattles Gartman Letter – Gata
God bless income disparity – FT Alphaville
Bernanke’s QE silence a blow to gold price – FT