GO
Loading...

Gartman: Jitters Trigged By Gold Sell-Off Way Overblown

Jittery investors are keeping a close eye on the materials sector which was the biggest drag in the S&P Tuesday due to a sharp slide in metals.

But of all the declines nothing seems to have rattled investors quite as much as the decline in gold.

The negative action immediately calls to mind the 2011 prediction made by Doug Kass on CNBC’s Fast Money in which he told us gold would plunge by $250 an ounce in a 4 week period.

Of course Kass can be dramatic to an extreme, so for further insights we turned to one of the most esteemed commodity traders in the nation – Fast Money friend Dennis Gartman, author of The Gartman Letter.

Gartman tells us he thinks fears about the sell-off are overblown. “Can gold go down $100 from its high? Sure. But will it do enormous damage to the long-term upward trend in gold. Not really.”

However, if you’re a trader the sell-off may present some opportunity. Gartman also says the downtrend in gold could last through much of January.

”It creates fear in the longs and joy in the people who are short,” and as a result it generates short-term momentum to the downside. “I wouldn’t be surprised (to see) the correction last 2 or 3 weeks.”

But for investors with a long-term time horizon, what matters most is the long term trend and in gold that's from the lower left to the upper right, a positive trend.

And Gartman is putting his money where his mouth is.

”I remain bullish of gold in non-US dollar terms,” he tells us. “No, Tuesday action wasn’t fun. But do I think the bull market in gold has ended? Not really.”

Meanwhile the Fast Money traders see the declines a little differently.

Joe Terranova is bearish on gold in the near term. “I think the story has changed,” he says. “The charts may be setting up for a head and shoulder formation,” a typically bearish pattern.

Jon Najarian has spotted a large buyer of puts in the GLD . “All the way down to the 115 strike,” he says. “I don’t think that’s somebody buying protection. That’s suggests someone is taking a shot at a large correction.”

Patty Edwards prefers taking a wait and see approach. “I'm watching the 50-day at 1380,” she says. “I can’t be that bearish unless we break below that level. Time and again gold has slipped to its 50-day and then found support.”

Steve Cortes is also solidly bearish. “I’m short gold and if it closes below $1400 I’m going to add to my short position,” he says. In fact Cortes thinks investors should also draw a macro conclusion from the gold sell-off. "I don’t think it will be confined to the precious metals," he says. "Since late summer gold and the S&P have been closely correlated."

What do you think? We want to know!

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.




______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On January 4th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Cortes is short Gold; Cortes is short Corn; Cortes is long USD vs. the Yen; Cortes is short (LVS); Cortes is short (BCS); Cortes owns (TSN); Cortes owns (EXC); Cortes is short (XRT) vs. the S&P; Cortes is short (XHB) vs. the S&P; Terranova owns (GM); Terranova owns (C); Terranova owns (VRTS); Terranova owns (UPL); Terranova owns (PEP); Terranova owns (OXY); Terranova owns (GS); Terranova owns (SLW) puts; Terranova owns (GLD) puts; Jon Najarian owns (AAPL), is short (AAPL) calls; Jon Najarian owns (AA), is short (AA) calls; Jon Najarian owns (BP), is short (BP) calls; Jon Najarian owns (BBY), is short (BBY) calls; Jon Najarian owns (BAC), is short (BAC) calls; Jon Najarian owns (GS), is short (GS) calls; Jon Najarian owns (GM), is short (GM) calls; Jon Najarian owns (MSFT), is short (MSFT) calls; Jon Najarian owns (V), is short (V) calls; Jon Najarian owns (CSCO), is short (CSCO) calls; Jon Najarian owns (WMT), is short (WMT) calls; Jon Najarian owns (VZ), is short (VZ) calls; Jon Najarian owns (FMCN)


For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (CLB)

For Patty Edwards
Edwards owns (SPY) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (AMZN) for clients
Edwards owns (SBUX) for clients
Edwards owns (MCD) for clients
Edwards owns (F) for clients
Edwards owns (TTM) for clients
Edwards owns (TSLA) for clients
Edwards owns (V) for clients
Edwards owns (JNJ) for clients
Edwards owns (AAPL) for clients
Edwards owns (MSFT) for clients
Edwards owns (GS) for clients
Edwards owns (WFC) for clients
Edwards owns (C) for clients
Edwards owns (FXI) for clients

For James Faucette
Pacific Crest Is A Market Maker In (MMI)
Pacific Crest Is A Market Maker In (MOT)
Pacific Crest Is A Market Maker In (MSI)
Pacific Crest Is A Market Maker In (QCOM)
Pacific Crest Is A Market Maker In (AAPL)
Pacific Crest Is A Market Maker In (SWKS)
Pacific Crest Is A Market Maker In (TQNT)

For Dennis Gartman
Funds managed by Dennis Gartman are long gold
Funds managed by Dennis Gartman are short yen
Funds managed by Dennis Gartman are short dollars
Funds managed by Dennis Gartman are long oil
Funds managed by Dennis Gartman are long the Australian Dollar

GE is the parent company of CNBC
NBC Universal is the parent company of CNBC




CNBC.com with wires.

Contact Halftime Report

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET