This has been a great year for stocks, but not so much for gold. The two have moved in opposite directions this year, with the S&P 500 index up nearly 24% while gold is down 22%. Gold is on its way to having its first losing year since the start of the millennium.
Dennis Gartman, editor and publisher of The Gartman Letter, says it was inevitable gold would go down.
"After 11 or 12 consecutive years on the upside, you can't 11 or 12 consecutive days on the upside for anything, much less 11 or 12 years," says Gartman. "So, the fact that gold is down shouldn't be all that surprising. Money has moved from the gold market. It's moved to the equities market."
For those gold bugs hoping bullion will move up higher in the next two months so that it breaks even for the year, Gartman has bad news. "Gold's going to finish this year lower, no question," says Gartman. "Stocks are going to finish 25% to 28% higher. It's the perfect hedge. And, I think going into next year, probably the trade shall be to continue to be long of stocks but hedge that by being long of gold at the same time."
That doesn't mean those long gold should entirely lose hope. "During my lifetime of 40 years being in the market, more often than not, stocks and gold move in contravention from one to the other rather than in convention one with the other," says Gartman. "But, next year, we're probably going to see both move in the same direction. My bet is that they'll probably both be moving quietly higher."
That said, given the choice of investing in gold or stocks, Gartman says he would pick stocks. To hear his reasons why, watch the full interview in the video above.
More from Talking Numbers: