Gartman: Three Things Gold Investors Need to Do Now

"Gold is still probably going to head lower," says Gartman. "So, you've got to do something."

Here are Gartman's three tips on what gold investors should next:

  1. Reduce the size of your position:
    Gartman says: "You always have to own some gold, but you don't have to own as much as you have.

  2. Sell call options against your gold:
    Gartman says: "That might be a way to mitigate your risk. If you have an account that allows you to trade options, take a look at the gold ETF (such as GLD). I think you have to sell some at-the-money calls to protect yourself on the downside. At least take in a little bit of income. Volatility levels have been rather high in the last several weeks. The price of an option is predicated upon how volatile the underlying instrument has been. Gold has been unbelievably volatile and it has been on the downside. Option premiums are going to be little bit higher. So, sell some options.

  3. Sell mining shares against your gold:
    Gartman says: "Sell the gold ETF short if you can take a short position. Or, if you can't do that, sell short some of the mining stocks. The mining stocks have been horribly underperforming bullion itself. That might be a way to do it.

"But the easiest way," says Gartman, "is simply reducing the size of your trade. Gold still looks like it wants to go lower. If you have an exposure, cutting some of that exposure in some manner is the proper course of action to be taken. "

For those who think now is a good time to average down their investment, Gartman warns, "Averaging down is the carcinogen of investment. You have no idea how far down can be. When you average down, you're averaging a losing trade. Try to do more of that which is working and less of that which is not."

[Disclosures: As of the time of this taping, Dennis Gartman is short gold while his fund in Canada is long gold.]

Follow us on Twitter: @CNBCNumbers
Like us on Facebook: