Taking Virginia-based economist and publisher of the Gartman Letter, Dennis Gartman, for example. His track record for forecasting gold prices (NYSEARCA:GLD) is so bad that he’s become known as the latest contrary indicator—a ‘professional’ punter, if you will.
Moreover, it’s been suggested that the reason for Gartman’s subscription base is to get fast-track knowledge of Gartman’s trade so that a trader can take the other side.
Just last week, Gartman told Bloomberg News, “we are out of gold” as of Monday (Dec. 12) and “the beginnings of a real bear market, and the death of a bull.”
Sounds dreadful, doesn’t it? So what should gold holders do? Well, let’s see how the advice of the gold market’s Lord Haw-Haw panned out for investors during previous corrective phases—which, by the way, are those very times when buying gold makes more sense in a secular bull market.
“I feared the whole financial system was coming to a halt, and you need a little gold in that case,” Gartman told Bloomberg News on Nov. 3, 2008. “I doubt it will anymore. But it sure felt like it a month ago. There’s no value in gold now.” (See chart, below.)
Three weeks later, on Nov. 25, Gartman didn’t change his mind; he got more bearish when he should have been a raving bull!
“We are short of gold,” he said in a Bloomberg interview. “We shall always sell rallies such as these that retrace as classically as this market has.”
As the market continued to rally, Gartman became ever more aloof, stating on November 16, 2009 that there was, indeed, “a gold bubble” and anyone thinking otherwise is “naive.”
Apparently, ‘Mr. Gold’ James Sinclair of JSMineset hasn’t been a long-term subscriber to the Gartman Letter. Eight weeks earlier, Sinclair saw gold for what it is: a hedge against currency devaluations.
“The carry trade has dropped the dollar as a currency of choice,” Sinclair told Bloomberg Radio in a Oct. 7, 2009. “Gold is competition to currencies,” and added that he expects gold to reach $1,650 per ounce by the first quarter of 2011. Sinclair was off by five months, as gold soared during the summer of 2011, reaching his $1,650 price target in August.
Back to Gartman:
Somewhere between the dates Nov. 16, 2009 and May 18, 2010, Gartman became to think, maybe, it was he who was naïve about the gold market, jumped back into the “bubble” at some point during the six-month period, then proclaimed to Reuters on May, 18, 2010, “We want out and are heading for the sidelines.”
Now Gartman tells us gold is done. Finished. The Fed is done bailing out banks on both sides of the Atlantic and a deflationary collapse is coming.
Apparently, others, too, have noticed Gartman’s poor record of calling bull market tops. Didn’t Marc Faber make reference to these misguided souls in his interview with Financial Sense Newshour? See BER article, Marc Faber Fears Gold Confiscation.
“In August 2011, Gartman said that gold was the biggest bubble of our lifetime. Inconsistently, only last week, Gartman said on CNBC that he is ‘long gold’ and has been for ‘six or seven months’,” zerohedge’s ‘Tyler Durden’ wrote.
“Gartman’s short term calls on gold and silver have been wrong more often than not in recent years. He tends to turn bearish after gold has already experienced a correction and is close to bottoming.
“Those wishing to diversify and add gold to their portfolio will use his call as a contrarian signal that we may be getting close to a low in this most recent sell off. Our advice is to ignore gurus, price predictions and noise – up and down – and focus on the real fundamentals driving the gold market.”
The obvious question, therefore, is: Why subscribe to the Gartman Letter while others steeped in the gold market have gotten it right? One doesn’t have to pay for some good advice. Just point your browser to King World News and listen to Eric King’s interviews with the gold market’s real McCoys, or read James Sinclair’s JSMineset.com blog.
Related: SPDR Gold Trust (NYSEARCA:GLD), iShares Silver Trust (NYSEARCA:SLV), Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ), Market Vectors Gold Miners ETF (NYSEARCA:GDX), iShares Gold ETF (NYSEARCA:IAU).
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