Gold caught the attention of our traders after the precious metal fell to its lowest level since late January.
Does the weakness present any sort of buying opportunity?
Top commodity trader Dennis Gartman doesn’t think so. Amid all the market’s recent woes, “gold got preposterously expensive,” he says, and buying the current dip would therefore be misguided.
Gartman's thesis is pegged to his belief that recent economic data from the US as well as the rest of the world suggests the doomsday scenarios are off the table. “Concerns about a global meltdown are gone,” he says. “We’re seeing signs that global growth is solid and sustainable.”
As a result, Gartman thinks that the gold trade has changed fundamentally. That is, less money is seeking safe havens, and the gold trade has been, at least in part, a safe haven trade.
To support his thesis he points to a rotation underway. "Stocks are doing better and bonds are breaking down. That tells me economic activity is better. Money is moving."
“The economic activity is showing that gold’s bullish case in any currency (other than yen) is a difficult case to be made.”
In conclusion, Gartman says “The world rarely melts down. It will only do it once and it’s a bad bet."