Is the gold rush over?

Dennis Gartman was on CNBC earlier today laying out his case against gold and aside from him saying that the bull market is dead, I can’t help but agree. Price action for the precious metal has been very erratic lately, bullish news followed by short rallies are telling me that the big guys are either out or cashing in to the late longs and despite the probability of more money printing (or whatever bullish case you might have) to come, the bulls seem to be nowhere in the order flow.

Granted, I haven’t been following gold that much these past weeks so I could be dead wrong on this one, but either way I can’t help but feel that unless something big happens, the gold market could end up pretty ugly.

What do you think monkeys?

Is the gold rush over? Or is it just taking a breather?

Video after the jump.

 

This guy changes his position every month (literally, he was bullish the end of october). Lots of downward pressure has come from margin calls and selling gold to meet margin calls in other equities. I think we're going up from here.

 
Best Response

Yeah, not to knock Gartman too much (I'm still a big fan of the Gartman letter but again, I don't have much experience or access to street research) but the guy is a terrible trader. I remember seeing him on CNBC a few months ago talking about how he cut his gold holdings in half right after that drop in late June from 1550 to 1500. Of course, this was right before the market took off.

I think that there will be erratic price movement in the short term as investors are worried about uncertainty in China and hedge funds are selling out of their position (I like to think that Paulson is liquidating the only gains he's had all year to cover his losses hahaha) but that it still has significant upside in the long term as investors will move to risk off since the eurozone problems still have to be fleshed out and the developing world is still going strong (China and India are huge buyers of gold). I think short term trading on technicals is probably the best way to play the market right now. Price seems to be settling around the high 1500's-1600 range.

I also don't think that governments will necessarily drastically deleverage anytime soon. Investors seem to be schizophrenic when it comes to the term "austerity" as they want less leverage while they don't want to swallow the lower growth that comes along with it. Knowing that, I think that austerity as a solution to the Eurozone crisis has a long way to go before it's politically accepted across the continent. I believe the IMF just put out a report slamming the ability of austerity as a solution for the crisis.

 

QE3 and I'm in. Without that I think it will drop to around $1400, but idk if we can see the same explosive growth in commodities without easing again (prior to an explosion in the velocity of money/inflation that can occur when the economy truly recovers).

Reality hits you hard, bro...
 

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