My first response to this question, is…”who cares?” I listened to Dennis Gartman speak at a LPL financial conference a few years back and Dennis Gartman gave a speech about how he readily admits he is wrong 80% of the time. So while Gartman was on CNBC telling everyone he was selling his gold, he actually sold 1/4 of his gold holdings for the following reason;
What he did was put those proceeds into the stock market. For reference purposes of those reading this email at a later date, the DOW at the time of his remarks was at 12,195.
What I Find Interesting About Gartman’s Decision To Sell Some Gold
Personally, I don’t think those who invest with Gartman are doing that well of late. He has said to buy gold in Euro’s, but the Euro hasn’t dropped by that much. He didn’t say to buy U.S. equities when the DOW was approaching 10,000, but says to now that it is 20% higher. Why? Is the stock market going higher because companies are producing things people want, outside of iPads and iPhones?
I don’t know about you, but I see the effects of the recession everywhere I go. I continually ask people, how is business? The answer is always the same; slow. It’s especially slow right now as the Christmas season is upon us. People are cutting back on those things they might normally do. This is deflationary. The DOW will be below 10,000 again and Dennis Gartman will be wondering what went wrong.
Can the DOW move higher on a temporary basis? Sure it can. Obama is in a reelection year for his 2012 run for the Presidency. He will pull out all stops to keep the DOW propped up, even going so far as to tell Bernanke to implement QE3 if necessary. While Bernanke will deny that he is propping up the stock market, we already know he denied helping the banks with the $7.7 trillion he gave them in the last few years.
I wish Bernanke was forced to not tell a lie like Jim Carey in the movie Liar, Liar. That would be a fun day for me. I’d especially like to hear him speak to what he has bank holding companies, Goldman Sachs and J.P. Morgan do in propping up markets, or shorting silver and gold.
What Does Dennis Gartman, Mitt Romney and Newt Gingrich have in common?
They are all flip flopper’s. I wrote about Gartman’s flip flopping on March 19, 2010 in Dennis Gartman Flip Flopping On Gold and U.S. Dollar.
We, however, are making a material shift in our sentiment toward gold this morning and we shall again mince no words as we make that shift: rather than owning gold in foreign currency terms, we wish to own it in US dollar terms, for we now fear for the dollar rather than cheer for it in the light of this battle between the President and the Banks. Where we once wished to avoid the bearish dollar bet that one is making when one owns gold in US dollar terms, in light of the battle that is shaping up between the President and the capital markets, we shall instead embrace that dollar risk.
The dollar has done nothing but go up from when he said those words. I have since heard him getting out of the dollar gold and back in again, just before gold started to fall. It’s hard to keep up with what he says, but you won’t find too many people on CNBC’s Fast Money program who are long gold and short the stock market, that’s for sure. You have to be a CNBC team, stock market cheerleader to be on that show.
Melissa Lee Up To Her Old Gold Bashing Tricks
If you watch the CNBC Fast Money show video of Melissa Lee interviewing Gartman, you can hear her try and get her digs in on gold as she is a perennial hater of it. Here is what she asked Dennis Gartman; “You saw the price action in gold and that’s what troubled you?” Her insinuation was that because the price of gold has fallen the last month, it’s time to get out. Excuse me Melissa Lee, did Congress somehow balance the budget? Did Congress somehow get rid of the $15 trillion debt? Did the Fed not just get caught handing the banks $7.7 trillion? Do you not understand what the future holds? Evidently not, as you were the one who told everyone to get into equities right before the stock market crashed. The interest on the debt alone will be a huge future problem once interest rates start to rise. That’s why the Fed is pulling out all stops today to try and keep them low….to “stimulate’ the economy, leading to only temporary bumps in business. By the way, the $7.7 trillion the Fed gave to the banks….comes out to about $2,400 per man, woman and child in the United States. If they wanted to stimulate the economy, that would have been a better plan. Instead, the Fed’s favored sons got to give their executives bonuses. The Wall Street Journal estimates that total compensation at large financial services companies rose 5.7 percent to a record $149 billion in 2010.
All data below from; AFL-CIO
Goldman Sachs CEO in 2010, Lloyd C. Blankfein received $14,116,423 in total compensation.
JPMorgan CEO in 2010, James Dimon received $20,816,289 in total compensation.
Wells Fargo CEO in 2010, John G. Stumpf received $18,973,722 in total compensation.
and the kicker; now bankrupt MF Global CEO in 2011, Jon S. Corzine received $14,245,157 in total compensation. For those that haven’t been following the MF Global bankruptcy and the lost money, if you have the time, this is a good synopsis: MF Global and the great Wall St re-hypothecation scandal.
CNBC Spins Headlines of Gartman Selling Gold
Of course CNBC itself, as a media outlet, had to spin in their headlines what Gartman said. The entire story said nothing about Garmtan selling 1/4 his gold, but rather just that he sold it. Check out what they said in the screen capture of their article below.
The media also spends most its time promoting Newt Gingrich instead of someone like Ron Paul who can help get this country back to the glory days again. Newt Gingrich will drive this country into the ground if elected President. So will Obama if reelected. They have no concrete plans to fix this economy. So while CNBC mocks gold on a daily basis, they can’t hide the fact that our country is broke and the banks are skating on very thin ice. But for the meantime, the dollar is moving higher because Europe is skating on thinner ice. While this is occurring, as I have been saying, gold and silver will feel the pressure. This is the time to dollar cost average into a position if you haven’t bought any gold or silver yet. The debt isn’t going away and will get worse once interest rates start to rise and inflation rears its ugly head. We are a ways away from that. The banks aren’t going to see the real estate they have on their books at much higher valuations, return to those once lofty prices anytime soon either.
Deflation still has it’s hold of this economy as we weed out the bad either by default or by bankruptcy. But the Fed will always be there to bail out banks and countries. The world’s Central Banks and the IMF will put together some sort of package to help out the Euro. It won’t work. The only thing these cats do is put temporary fixes on things and get the media to hype it. In the long run, none of these things fixes anything. That’s why you own gold and silver. It’s insurance against what’s to come. It won’t be pretty. Dennis Gartman can sell his gold today, but he’ll be buying it back in the near future once the trend reverses.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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