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Commodities Comeback

Friday, 22 Feb 2008 | 10:17 PM ET

What's your next move as crude hovers near $100 and gold and platinum hit new highs?

Esteemed investor Dennis Gartman, author of The Gartman Letter, joins the panel for this conversation. Following is a summary of his main points.

Tomorrow's Trades #1
Playing commodities, with Dennis Gartman and the Fast Money traders.

What do you make of oil?

It looks like oil is breaking out to the upside, says Gartman. Everyone thought it was going to top out at $100 including me. But the fact that it’s broken though to the upside suggests it could carry on higher.

I think it’s a text book break out, he adds. A friend of mine used to say, “Do the hard trade,” and the hard trade is to own crude oil. It’s a classic text book break out.

And what about gold?

I’m still long gold and short of stocks; one against the other. It’s been a good trade, he replies.

Thoughts on copper?

I got killed in copper two years ago, being short Phelps Dodge. So, like Mark Twain’s cat I don’t sit on the same hot stove, twice! But it looks like a break out and if I had to do something, I’d buy it.

Why are commodities moving higher in the face of a US economic slowdown? Shouldn't they be sliding?

That’s a conundrum, Gartman says. The fact is, we simply don’t know the reason. But the price tells us that the trend is up. If you’re trying to be short of it, you’re probably on the wrong side of the trade.

I think we’ve de-coupled from the rest of the world, he adds. Elsewhere demand is strong. We might be learning that demand from the rest of the world trumps that of the United States.

What’s your best trade?

Be long of gold and short of US stock market, Gartman replies. And be long of platinum and palladium and short General Motorsbecause there’s a shortage of these metals needed to make catalytic converters.

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Trader disclosure: On Feb.21, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (INTC), (YHOO); Seymour Owns (AAPL), (CSCO), (F), (MSFT), (S), (TSO), (SBUX), Seygem Asset Management Owns (CCJ), (TIE), (GAF) Seygem Asset Management Is Short (EEM); Finerman’s Firm is Short (IYR), (IJR), (SPY), (MDY), (IWM), (LEH) and Owns (LEH) Puts; Finerman’s Firm Owns (VLO), (TSO), (MSFT), (KSS), (JCP), (AAPL), (TSO), (VLO), (YHOO), (WMT), (MO), (AEO); Finerman Owns (GS); Dennis Gartman Owns (CIM), (COIN), (PRB), (SID), (PAL), (UNG), (GLD), (UUP), (SWC), (HOV), (GWR), (GMO), (SDS); Gartman is Short (SDS), (COH), (HOG), (RTH), (MMM), (GM), (DCR), (AAPL), (DRYS), CIBC; Gartman Index Owns Gold, the EUR, the Canadian Dollar, Sugar

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GM
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