The End Of The Gold Bull Market?

Bloomberg.com – Death of Gold Bull Market Seen by Gartman

Gold, in the 11th year of its longest winning streak in at least nine decades, is poised to enter a bear market, according to Dennis Gartman, who correctly predicted the slump in commodities in 2008.The metal, which traded at $1,666.30 an ounce at 2:43 p.m. in London, may decline to as low as $1,475, the economist wrote today in his Suffolk, Virginia-based Gartman Letter. He sold the last of his gold yesterday. Bullion has already dropped 13 percent from the record $1,921.15 reached Sept. 6 and $1,475 would extend that to more than 20 percent, the common definition of a bear market. “Since the early autumn here in the Northern Hemisphere gold has failed to make a new high,” Gartman wrote. “Each high has been progressively lower than the previous high, and now we’ve confirmation that the new interim low is lower than the previous low. We have the beginnings of a real bear market, and the death of a bull.” The metal typically moves inversely to the dollar, which today reached a two-month high against the euro after Fitch Ratings and Moody’s Investors Service said yesterday that a European Union summit last week offered little help in ending the region’s debt crisis. Bullion is still 17 percent higher this year and holdings in gold-backed exchange-traded products are at a record, a hoard now valued at $126.5 billion.

MarketWatch.com – The gold bugs are throwing in the towel

Gold bugs over the last two weeks have become even more discouraged than they were at the end of November. And that’s saying something, since they were already quite dejected. As a result, contrarians detect a very strong wall of worry forming in the gold market, one which could very well be the springboard for bullion rallying into new all-time high territory. Consider the average recommended gold market exposure among a subset of the shortest-term gold market timers tracked by the Hulbert Financial Digest (as measured by the Hulbert Gold Newsletter Sentiment Index, or HGNSI). Two weeks ago, when I last wrote in this space about a contrarian analysis of gold sentiment, this average stood at 13.7%. Today it stands at 0.3%, which means that the average gold timer is essentially keeping all of his gold-oriented portfolio out of the market. To be sure, I reported two weeks ago that, on the basis of the HGNSI being as low as 13.7%, contrarian analysis was already bullish on gold’s prospects. And yet, far from rallying, the yellow metal since then has fallen by more than $100 per ounce. What assurances do we have that contrarian analysis will be any more successful this time around? We don’t, of course. But it’s worth stressing that contrarian analysis is right more often than it is wrong. For example, I have been measuring gold market sentiment for three decades, and have subjected the HGNSI to rigorous econometric tests.

The Wall Street Journal- All That Glitters…Will Not Solve Europe’s Debt Woes

Fact No. 1: European governments are among the biggest holders of gold on the planet. Fact No. 2: Massive debts owed by some of those governments are fueling a political crisis in Europe and turmoil in markets around the world.Those two facts lead to an obvious question from a lot of investors: Why don’t those governments sell gold to pay off their debts? If only it were that simple. For starters, not even the Europeans own that much gold. The borrowing needs, and subsequent debts, of countries like Italy, France and Spain are so huge, analysts say, that liquidating their gold reserves wouldn’t go far toward balancing their books for the long term. “If they sold their gold, I’m not sure it would do anything to their credit rating,” says Kenneth Rogoff, an economics professor at Harvard University who has studied official gold reserves. “This is not exactly a game changer.” Market and political realities, too, would make it challenging for Europeans to rely on a golden parachute, experts say. For one thing, there’s a risk that trying to sell the gold or use it as collateral for a loan could be seen in the market as a sign of desperation—which could drive up borrowing costs by making lenders even more wary, defeating the purpose.

Source: Arbor Research