Tags: Gartman | gold | miners | ETF

Dennis Gartman: Gold Is Good but Gold Stocks Are Even Better

By John Morgan   |   Wednesday, 28 Nov 2012 07:50 AM

While noted economist and investor Dennis Gartman has a positive outlook on gold these days, he likes gold stocks even more and sees a rocky road ahead for bonds.

“Gold equities have me interested for the first time in years,” Gartner said in a wide-ranging global investment chat with Toronto’s Globe and Mail.

“Gold equities trailed gold bullion badly, but now they are beginning quietly to gain upon bullion. I watch the ratio of the [NYSEArca Gold Bugs Index (HUI)] to gold bullion and about four months ago that ratio began to move in the HUI’s favor.”

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Gartman, a frequent guest on CNBC and editor of the eponymous The Gartman Letter, suggested long-term investors buy gold stocks now. But he said short-term traders might wish to own gold via Yen-denominated purchases of gold futures or the SPDR Gold Shares (GLD) exchange-traded fund.

“I think gold goes much higher in Yen terms and right now it is trading around Yen 143,000/oz, and with the government there that shall be taking power in January fully committed to a Bank of Japan that prints ‘unlimited’ sums of Yen, I can readily see gold trading to Yen 225,000/oz over the course of the next several months” Gartman predicted.

As for specific gold stocks, Gartman believes the larger miners are preferable, including clients of his such as Barrick Gold, ASA Ltd or Newmont Mining, saying he will “always err in favor of the big boys.”

He is not as bullish on some of the smaller names. “The things that trade on Vancouver and [over the counter] are best left to those younger or wiser than I,” he said.

Gartman predicted President Barack Obama’s re-election could portend a downturn in bonds, although he acknowledged that recent short sellers in the bond market have been on the wrong side.

“Democrats are historically very good for the equity market and very bad for the bond market. My guess is that history will play out as it has played out in the past: good for equities rather bad for bonds.”

Gartman also told the Globe and Mail that he has a positive outlook on the dollar currencies — U.S., Canadian and Australian — and may soon re-invest in dividend stocks.

Separately, The Wall Street Journal reported that gold traders are closely following developments in U.S. fiscal cliff negotiations.

“Until we get the fiscal cliff situation settled, there’s a reluctance to commit aggressively to hard assets,” said Bill O’Neill, a principal with Logic Advisors.

“The whole world is watching that,” he added.

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