Gartman Bullish On Gold

In gold news today prolific commodity investor, Dennis Gartman, said Friday he has become more bullish on gold as inflation picks up.

 

Dennis Gartman publisher of the iconic Gartman letter, whose clients include many of the leading banks, broking firms, mutual funds, hedge funds grain trading companies, has been optimistic on the commodities prices.

He said he has previously liked gold only in yen and euro terms but is now “turning fundamentally bullish” even in dollar terms.

“I’m not a gold bug. I don’t think the world is coming to an end. But I do think inflation is beginning to pick up incipiently at the margins,” he told CNBC’s “Squawk Box.”

Gold is often held as a hedge against inflation, though some investors question its effectiveness as protection against rising prices.

Gold prices have risen about 4.5 percent this year. Moreover, according to the core personal consumption expenditure index gold prices have risen 1.6 percent year over year.

The reasoning for Gartman optimism is likely due to the consistent strength in grain and livestock prices as signs of sustainable inflation. In addition, central banks outside the United States are buying up assets to stimulate their respective economies, he said. That asset buying typically produces higher prices.

“All those things being equal, all those things being summed up have to argue for stronger gold prices,” he said.”

Gold prices could rise even more if the Fed keeps interest rates low. However, this may produce the opposite effect because with low or negative interest rates people are encouraged to take money out of banks and hold cash, which is deflationary.