Gartman: Gold Traders at War & Decisive Battle Imminent
Dennis Gartman says current turbulence in the gold market bears a strong resemblance to the final volatile days of WWI. If you’re trading precious metals, we hope you know your history.
In the spring of 1918, the Entente Powers and the Germans were locked in trench warfare.
“Both sides fired ammunition at one another, first they were 300 yards apart, then 100 yards apart then to 50 yards apart,” says Gartman. And they just kept fighting – literally to the death.
The same thing is happening in gold market with bulls on one side and bears on another.
“The range in which gold is trading is growing ever tighter – the lows are higher and the highs are lower.” Gartman says.
In other words, the bulls and the bears are closing in on one another – like the Allies and Germans at the Second Battle of the Marne.
And when the battle is finally over - Gartman thinks the bears will sue for armistice.
“Ultimately I think bulls win,” says Gartman. “I think gold will break out to the upside.”
However, we’re not at the Treaty of Versailles stages in this trade just yet. Investors are still in the trenches – and Gartman expects the fighting to get bloodier in the near-term.
“Before this ends, gold will probably first breakdown,” says Gartman. That will hurt investors who are long by stopping them out of positions.
“Only after the bulls are wounded will gold then move substantially higher,” Gartman says. Top hedge fund manager Renee Haugerud made similar comments on CNBC earlier in the week. She said, "gold will hit $1800 later this year."
You a history buff like us? Check out these CNBC Wall Street History videos:
> George Washington Could Have Bought This StockThere's a stock currently trading on the NYSE that George Washington could have bought and sold, when he was in office. Tyler Mathisen has the details.
> How Wall Street Got Its NameRon Insana has the story of how New York's famous financial district got its name in the 18th century.
> High Frequency Trading Is Nothing NewTyler Mathisen looks at the shrewd and somewhat outrageous strategies used by financial pros in the 19th century to get a leg up on the competition.
Posted by CNBC's Lee Brodie
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Trader disclosure: On August 8, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long USB; Joe Terranova is long GS; Joe Terranova is long JPM; Joe Terranova is long YHOO; Joe Terranova is long SBUX; Joe Terranova is long WFM; Joe Terranova is long AAPL; Joe Terranova is long NXPI; Joe Terranova is long EMC; Steve Grasso is long HPQ; Steve Grasso is long MU; Steve Grasso is long DD; Steve Grasso is long ZNGA; Steve Grasso is long MSFT; Anthony Scaramucci is long AAPL; Anthony Scaramucci is long C; Anthony Scaramucci is long JPM; Anthony Scaramucci is long GS; Anthony Scaramucci is long WMT; Jon Najarian is long call spreads in GMCR; Jon Najarian is long call spreads in OCN; Jon Najarian is long call spreads in SBUX; Jon Najarian is long call spreads in YELP; Jon Najarian is long call spreads in MON; Jon Najarian is long put spreads in HPQ; Jon Najarian is long put spreads in KCG; Jon Najarian is long CME; Jon Najarian is long CBOE; Jon Najarian is long CIGX; Jon Najarian is long GLUU
For Dennis Gartman
Dennis Gartman is long Gold in yen Terms
For Toni Sacconaghi
Bernstein currently makes a market in the following companies AAPL
Toni Sacconaghi maintains a long position in Seagate Technology STX
CNBC.com with wires.