He also thinks the recent housing starts numbers, which were released Tuesday, bodes well for copper. The report showed that US housing starts rose more than expected in June and that permits for future construction unexpectedly increased. Gartman thinks those numbers trump the weak existing home sales data released Wednesdaysimply because its the new houses that need copper, not the existing ones.
But Gartman feels its China that really influences demand for copper and other metals simply because China is growing so rapidly. He said the country is probably worth about 40 to 50 percent of what’s generally going on in the base metal markets.
“We have to get used to the fact here in the United States that we are no longer the big dog in the hunt,” he said. “China is becoming a bigger dog every day.”
Will a debt ceiling deal hurt the gold trade?
With the August 2 deadline for a debt ceiling agreement fast approaching, a new proposal has been put forwardby a bipartisan “Gang of Six” senators.
And Dennis Gartman thinks if the deal goes through, it may take some of the shine off the gold market. But that may not be a bad thing.
“You had this huge buildup in open interest last week that really shouldn’t be accommodated,” he said. “You have to take those late longs out of the market. The market usually does that in some way, it need some news and perhaps the Gang of Six passage …. if that happens, will be the reason for it.”
Gartman is still long gold, but is demonstrably less long than he was.
He thinks the trend is still up, but the gold market just simply needs another $50 to $100 correction.
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Trader disclosure: On July 20, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Cortes owns (GS); Cortes owns (MS); Cortes owns (EXC); Cortes owns (SVU); Cortes owns (PM); Cortes owns (NWS); Cortes is short Silver; Cortes is short (EUR); Cortes is short Copper; Cortes is short (LULU); Cortes is short (LVS); Cortes is short (IYT); Karabell owns (AAPL); Karabell owns (GOOG); Karabell owns (GS)
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