There’s no corner of the market more emotional than gold investing and, with bullion down more than 10% this month and 20% since early September, a war of words has broken out among North America’s most influential bullion investors. [For an understanding of who said what, please read on.] Words: 1315
So reports David Pett (www.financialpost.com) in edited excerpts from the original article*.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) has further edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
Pett goes on to report, in part
The fight started last Wednesday when Peter Grandich, the well-known goldbug and author of The Grandich Letter, wrote a scathing missive that called out fellow investment newsletter writer Dennis Gartman on his assertion earlier this week that gold is now entering a bear market [when he said, as reported in an article** by Bloomberg entitled Death of Gold Bull Market Seen by Gartman:
Since the early autumn here in the Northern Hemishere gold has failed to make a new high. Each high has been progressively lower than the previous high, and now we’ve confirmation that the new interim low is lower than the previous low. We have the beginnings of a real bear market, and the death of a bull.
Even more disconcerting is the fact that China has been an aggressive buyer of gold in recent weeks… and while buying of that sort should have sent gold prices soaring, instead they plunged. One of the oldest rules of trading is simply this: a market that cannot or does not respond to bullish news is a bearish market not a bullish one. This was manifestly bullish news and it was received very bearishly indeed.
Given how much psychological damage has been done to the gold market in the past week, and with so many long positions being caught off guard, he thinks wholesale liquidation and perhaps forced selling will be the outcome. It really won’t take much to push it there.
Grandich’s reply to what Gartman said is as follows***:
Dennis Gartman, a true master of self-promotion but who’s actual track record (if anyone in the media actually delved into it I believe they would see for themselves) better suits him for the lead role in “The Boy Who Cried Wolf,” has once again grabbed headlines with yet another the-gold-bull-market-is-over assertion.
Mr. Gartman is one of three people who many in the media continue to quote despite a nearly decade-long poor overall track record on gold. He, Jeff Christian and Jon Nadler have demonstrated to me (and I suspect many others) that a broken clock’s percentage of telling the correct time in any given day is about the same as their actual accurate forecasts for gold in the last decade.
Yours truly has called this the “mother” of all gold bull markets and, by making the following offer to the Three Stooges of gold forecasting, I would like to offer up a million reasons why:
I will wager any one of them (or a combination of all three) one million dollars U.S. that gold will hit $2000 before it hits $1,000 on the COMEX. I have arranged for the law firm of Lomurro, Davison, Eastman & Munoz of Freehold, New Jersey to hold the funds in trust.
For once, let one or all of the most arrogant and often wrong gold forecasters truly put their money where their mouth is when it comes to gold forecasting. This offer shall be good until midnight, December 31, 2011 (I will donate my winnings to charities).]
Mr. Gartman responded to Mr. Grandich personally in a letter****…, [as follows:
Firstly, sir, I wish you a Merry Christmas. I trust that your animosity toward me and toward John Nadler and Mr. Christian does not preclude me from making this statement.
Now, having said that, let’s clarify one or two things that clearly need clarification.. I have not said in recent days that gold was to plunge to $1000; I simply said that gold seemed extended to the upside, had performed rather poorly relative to equities, and appears likely to sustain a material decline. I have been around the markets long enough to know that putting a price upon a direction is a fool’s game. Gold is under some pressure, and has begun to weaken relative to equity investment, made rather clear by the fact that the GLD/SPX ratio has broken a longer term support line that had been in gold’s favour for several years. That trend line remains broken this morning and likely it shall remain broken for some while longer.
Too, until quite recently I have been manifestly, steadily, rather relentlessly bullish of gold for the past several years, standing aside once in a while after massive rallies, but always remaining either bullish of gold (in EUR terms primarily) or very bullish of gold, or merely neutral of it. I am, at the moment, neutral of gold and although I fear it may falter farther, I shall likely remain neutral of gold… standing hard upon the sidelines and awaiting a hoped for test of very long trend lines extending back for a decade or more.
This then should hardly be construed as being bearish; I have simply chosen to stand aside, and that my friend is why I’ll not take up your bet. I simply cannot see gold trading to $1000/ounce, although I do suspect that $1350-$1425 is reasonable and perhaps likely in the course of the next several weeks.
Again, I wish you well. I bear no animosity toward you, understanding fully that your anger with me was spawned by the violence of the gold market’s move yesterday. You and I have been around these markets for a very long while. Making enemies… even of those we disagree with in the short term…. Is a mug’s game I prefer not dealing in.
Warm holiday regards,
The Gartman Letter, L.C]
As for Mr. Nadler and Mr. Christian, they were a little less gracious when reached for comment. Mr. Nadler said in an email:
Mr. Grandich is not worth my time, or my attention. He ought not to be worth yours either. If Romney-style wagering about who is right and/or wrong is what the gold industry is being reduced to, we have a serious and very sad problem on our hands.
Mr. Christian, the managing director at CPM Group, has had a buy recommendation for intermediate-term investors with a 2 – 3-year time horizon since November 2000… and stated recently that gold was likely to spike to US$2,000 an ounce between now and the second quarter of 2012. Last week, he lowered that to US$1,920. [As such,] Christian…said in an email that he was not sure what to say about Mr. Grandich…describing Grandich as an “anti-intellectual liar who distorts my views” going on to say:
Since we have thus been saying that gold possibly could touch $2,000 before it touches $1,000, I would be a bigger fool than Grandich to take his bet since I would be betting against my own views. Since Grandich knows CPM Group’s price projections, it is curious that he chose to structure his bet in such a way that what he is suggesting we take as the other side of the bet would run counter to our published price projections. What does that suggest of him and his intentions? Furthermore, I don’t engage in such cheap theatrics.”
[Stay tuned! This clash of egoes is probably far from over.]
Gold is in a bull market and, [believe it or not,] so are the gold stocks despite their struggle as a group to outperform gold… but [neither] is anywhere close to a bubble, nor the speculative zeal we saw in 2006-2007. Thus, it begs the question” “What lies ahead and when can we expect the initial stages of a bubble?” To figure this out we first need to get an idea of how long the bull market will last and then where we are now based on various indice analyses. [Below I do just that.] Words: 785
You have no doubt read countless articles on the price of gold costing x dollars per “troy ounce” or perhaps just x dollars per “ounce” but the difference between the two measurements is significant. For that matter, what’s the difference between a 24 karat gold ring and an 18 karat gold ring? Let me explain. Words: 863
143 analysts maintain that gold will eventually reach a parabolic peak price of at least $3,000/ozt. before the bubble bursts. Of those 143 a total of 103 see gold achieving a price of at least $5,000/ozt. and 20 predict that gold will reach a parabolic peak price of $10,000 per troy ounce or more. Take a look here at who is projecting what, by when and why. Words: 745
The correlation between the gold price from 1968 until 1979 and from early 2000 until today is an amazing 89.65%! More specifically, the correlation from 1975 until April 1979 and from January 2008 until today is an astonishing 97.83% suggesting that gold will reach an ultimate top of $5,000 per troy ounce before the bubble bursts. Words: 330
It is my contention that the price of gold rallies whenever the U.S. dollar’s real short-term interest rate is below 2%, falls whenever the real short rate is above 2%, and holds steady at the equilibrium rate of 2%. Furthermore, for every one percentage point real rates differ from 2%, gold moves by eight times that amount per year. So if the real rates are at 1%, gold will move up at an 8% annualized rate. If real rates are at 0%, then gold will move up at a 16% rate (that’s been about the story for the past decade). Conversely, if the real rate jumps to 3%, then gold will drop at an 8% rate. [Let me explain.] Words: 982
Some gold bugs say that this is only the beginning and gold will soon break $2,000, then $5,000 and then $10,000 per ounce but the question is, “How can anyone reasonably calculate what the price of gold is?” For stocks, we have all sorts of ratios. Sure, those ratios can be off . . . but at least they’re something. With gold, we have nothing…. [or more correctly, had nothing, until the development of my very own model for doing just that. Let me explain.] Words: 945
The return of the Euro debt contagion and drop in the bond markets across the world is pushing interest rates higher and it has investors concerned and rightly so – and nowhere has the concern been more prominent than in gold. [Let me explain.] Words: 759