Today, analyst Dennis Gartman weighs in with his take on yesterday’s commodity market weakness.
Commodity prices have all but collapsed as the dollar and the Yen have soared, and nowhere was that more evident than in the precious and base metals markets. Grains might zinc, aluminium, tin, et al… break trend lines in tandem one with the other and do so collectively and rather clearly only the un-wise or stubborn to not pay heed. The weakness of the base metals collectively is telling us in the very loudest of terms that there is at least doubt as to the efficacy of a global economic recovery, and there is growing concern that a re-entry into recession is likely… perhaps even certain. Attention then must be paid. Night flares have been sent up.
Turning then finally to gold itself… the “King” of all metals… we cannot help but think that as gold trades this morning “at the Battle of Hastings” price ($1066 earlier this morning) that this is the only metal we would wish to be long of. In a deflating environment we needn’t own platinum, nor palladium, nor silver, nor copper, nor zinc et al; but we may wish to own gold and gold only for when inflationary push come to deflationary shove only gold endures. The gold bulls were taken out behind the shed yesterday and tossed into the same trash heap of liquidation that the copper owners, zinc owners, rhodium owners and others were tossed into. The margin clerks ran amuck yesterday, and they looked to gold for liquidity for it almost always can be found there. But now that the dust has settled, we own gold and we own government bonds as evidenced by our recommendations below. We’ll sit tight with both… for now.
For more information on Dennis Gartman’s “The Gartman Letter,” visit the official website at www.thegartmanletter.com.