My take on
Richard Russell snippet
Dow Theory Letters
Aug 26, 2010
August 25, 2010 -- Dennis Gartman is
an experienced commodity trader. Dennis has been very cautious
about gold; he "sort of" likes gold, so he calls himself
a "gold agnostic." For this reason it's most
interesting to read what Dennis says about gold in today's report.
"Turning, then to gold and other
metals, prices turned sharply for the better yesterday as the
world rushed out of equities and looked for any safe harbors
that were available. Certainly the rush to the Swiss franc was
obvious, as noted above, and so too the rush into sovereign debt
securities. But frankly, the rush was on to gold once again.
We remain long what we have referred to as an 'insurance' position
in gold, but we own it in terms of EUROs and /or of British pounds
sterling, otherwise we remain an agnostic. To assuage our friends
who are gold-bug-leaners, we shall not be short of gold. Nothing
likely shall ever turn us manifestly bearish of it. But for the
moment we are simply hard upon the sidelines, owning only this
small 'insurance' position and comfortably in that position.
"Might we be enticed back to the bullish side of the market
eventually? Of course we might. If the situation in the global
equities markets became dire, we might move from agnosticism
to 'faith." If we were to see the monetary authorities throwing
caution to the wind and massively explode their balance sheets,
we might be enticed away from our agnosticism to 'faith.' If
the political situation were to become untoward, and patently
uncomfortable, we'll throw our agnosticism in to a heap and join
the gold market faithful. But until then, agnosticism works for
-- I can understand Gartman's caution. Dennis is an old-time
trader, and he's seen a lot of traders get killed by taking huge
and wrong positions.
My own position is that gold is in a clear and obvious primary
bull market. These situations come along maybe two or three times
in a lifetime. I was convinced back in 1999 that the bear market
in gold had ended with gold selling at 256. In the year 2000
they were literally giving gold mining shares away. At that time
gold shares were so ridiculously cheap that I told subscribers
that they should buy these stocks (many selling for just a few
dollars a share) and hold them as perpetual warrants.
At the same time I told my subscribers to start buying bullion
one-ounce coins and "put 'em away." I've suggested
that my subscribers do the same thing ever since.
I know bull markets, and I've never seen or experienced a primary
bull market that didn't end with a third speculative phase --
this is the time when a bull market "blows its top".
I feel certain that the current huge bull market in gold will
do the same.
But I have other reasons for being bullish about gold. Gold is
the only real Constitutional money. The fiat paper that we've
been using as money is only money because our government says
"it's money." If the US government told you that printed
paper was real money and legal for the payments of all debts,
would you believe them. Well, you already have believed your
But I maintain that the truth will out, and that fiat
paper is a fraud that will be found out. When that happens and
people realize that they have been hoodwinked by their government,
there will be such a rush (including both fear and greed) for
gold that it will make the recent tech mania look like conservative
As I write at midday, Dec. gold is up over nine dollars. Gold
has been up 8 out of the last 10 days. As the months go by, we
are pressing ever-closer to the speculative phase of the gold
bull market. That will be something and even terrifying to see.
I am pleased to say that many of my older subscribers are now
in the process of getting rich on their gold holdings. I've said
over and over that one of the most difficult things to do in
investing is to get in early on a primary bull market and ride
the bull through to the latter part of its final speculative
The market seldom gives you the chance to get rich. This gold
market has defied the odds and allowed its early followers and
believers to get rich.
Anyway, that's my take on gold and why
you should own it and why you should follow my advice.
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