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Dennis Gartman: Gold & Corn ‘Better’ Commodities Plays

On Wednesday investors were taking a long hard look at commodities after our own Dennis Gartman was credited with underpinning the market due to his bullish comments.

The Fast Money ‘commodity king’ had said in a note that he would seriously consider adding to his gold positions again Wednesday after he bought bullion on Tuesday.

Gold again flirted with $1800 an ounce before paring gains.

However, it’s not just gold that’s got traders buzzing about commodities.

Corn futures rose to a one-week high on Thursday after the government downgraded the corn crop by 4 percent due to record heat in July sapping yield potential in the Midwest. Soybeans also surged, posting their biggest daily bounce since May, after the Department of Agriculture also cut its soy crop forecast more than expected.

Considering all the developments in commodities – including the market moving comments by Dennis Gartman – we couldn’t think of anyone better to turn to for insights than the commodities king himself.

Here’s what Gartman has to say about gold and corn.

Gold

Gartman tells us – as he so often has – if you’re trading with a long-term time horizon, the trend in gold is from the lower left to the upper right and he doesn’t see that changing anytime soon.

In other words, he thinks gold is going higher. However, that doesn’t mean gold will continue higher indefinitely.

"It’s going to get bubbly but we don’t have enormous public participation yet," and that’s something Gartman thinks is necessary before he can consider gold in a bubble.

”And we certainly haven’t gone parabolic yet,” he adds. That too is key to a bubble, according to Gartman. “We’ll have a day when gold is up $50, $100 or even $200 – and it will be on the front pages of the newspaper and it will be on the 6 o’clock news.”

When you see that, feel confident gold is in a bubble, he says, but not now.

And as an aside, Gartman cautions retail investors not to thinks of gold as a safe haven trade. “Gold moves $40 and $50 in the span of a day or two – that’s 2 and 3 percent. Safe havens don’t move like that,” he says.

He says thinks of gold as a refuge “because investors fear the demise of currency and the problems of government.”

Corn

Of all the softs, Gartman says corn is among the better commodity plays. "We have the Chinese coming in to buy corn in size," he says.

Although Deere & Co. has forecast corn prices at $5.75 per bushel in 2012, Gartman thinks that’s a very conservative estimate.

”I’m hard pressed to see corn at $5 a bushel at anytime in the next 24 months unless there’s an extraordinarily abundant crop this year and a crop that’s a whopper next year,” he says. “Demand from China, India and southeast Asia remains quite strong,” he says. "Emerging economies are strong and demand (for food) is inordinate.

Trader Tim Seymour is also long-term bullish on ag, however he’d play it with equities. “I’m a buyer of Deere on the dip. And also CNH and Kubota,” he says.






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Trader disclosure: On Aug 17, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns (AAPL); Seymour owns (BAC); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Finerman owns (AAPL); Finerman owns (BAC); Finerman owns (JPM); Terranova owns (XOM); Terranova owns (CVI); Terranova owns (CAT); Terranova owns (OXY); Terranova owns (AAPL); Terranova owns (DAR); Terranova owns (FCX); Terranova owns (CACI); Terranova owns (ARUN); Terranova owns (ORCL); Terranova owns (EMC); Terranova owns (NCR); Terranova owns (VMW); Terranova owns (IBM); Terranova owns (AMZN); Terranova owns (LULU); Terranova owns (LTD); Terranova owns (WFM); Terranova owns (JPM); Terranova owns (AXP); Terranova owns (FXA); Terranova owns (VRTS); Terranova owns (LQD); Stutland Owns (DBA) and short (DBA) calls; Stutland Owns (GLD) calls

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