Dennis Gartman went on CNBC and called a bottom for gold yesterday. He cited the duration of the current correction and also pointed to a bullish shift in participation from commercial traders in the latest CFTC report. Of course, Mr. Gartman is a prior banker and favorite of the establishment media, so his bottom call is just as likely a sign that another leg down is about to commence in the gold market. Many gold investors believe he is a contrarian indicator.
Nevertheless, I think the bullish shift in commercial traders’ positions is an interesting development, coming on the heels of the first FED rate hike in nearly a decade. Perhaps gold is due for a relief rally, as the markets can temporarily cast away the uncertainty and obsession around when the FED will hike. And we have to keep in mind that gold has a strong history of rising along with interest rates. So, while there is blood in the streets and very few investors are bullish on gold, this is typically the best time to be a buyer.
I still believe we will likely see a test of $1,000 before gold finally bottoms, but anything is possible in the short term.
Here are Hartman’s thoughts from CNBC:
“So after a 4½ year bear market, it’s time to be bullish,” Dennis Gartman told “Fast Money” traders Monday. “I got longer of gold late last week, and if we get above 1,085 I will get longer.”
“What really had my interest was the CFTC reports that came out last week indicating that the commercials, as they’re called, who are normally enormously net short, are almost net long,” the editor of the Gartman Letter said. “The fact that commercials are effectively net long and the public is abundantly out — that is a reason to be abundantly in.”
“Commercials are always ahead of the public,” said Gartman. “The last time we saw this happen in the other direction was when the commercials got egregiously net short back in November of 2011. They’re the ones that call the top, they’re the ones that call the bottom, so that alone has me interested.”
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