Tags: Gartman | gold | oil | conspiracy

Dennis Gartman: Gold Will Go 'Several Hundred Dollars' Higher

Wednesday, 24 Jul 2013 09:09 AM

By Michael Kling

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Gold prices will rebound, Dennis Gartman, founder of The Gartman Letter, told CNBC.

In fact, he believes gold will go several hundred dollars higher.

"I had been agnostic and modestly bearish of gold until about 3 ½ weeks ago," Gartman professed. "Then I wrote what I call 'a watershed commentary' that gold was going to go several hundred dollars higher."

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Major central banks, including the Federal Reserve, Bank of Japan and European Central Bank, he said, are expanding their reserves, which will boost gold.

"It's not a new story, but it's having an effect. ... We're seeing the effects of that monetary expansion."

Plus, the public has largely finished selling gold, and gold has broken above several technical levels in recent days, Gartman noted. "And it has given none of that back. I find that impressive."

A factor supporting gold is that it's seeing "backwardation," where the price of a futures contract trades blow the expected spot price at contract maturity.

"That's a market that tells you the demand for that commodity is strong," Gartman explained. "It's actually asking for that commodity to come out of storage."

He said he doesn't believe conspiracies are influencing gold supplies, as the metal doesn't need conspiracies for tight supplies.

"I don't see anything untoward here. The market is what the market is," he noted.

In addition, he doesn't believe conspiracies are involved in supplies of crude oil either.

"Demand for crude is strong, even relative to the supply that we have. The economies of the world are strong, and that's where you get a backwardation."

Gold has rebounded from June 28 low of $1,179.40, but some experts expect gold to again drop due to a less accommodative Fed monetary policy and tougher Indian import restrictions, Bloomberg reported.

India is restricting gold imports in an effort to reduce its record current-account deficit.

India's gold imports may drop 63 percent in the last half of this year from last year, Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation, told Bloomberg.

Gold may also be less attractive if the Fed starts slowing its monthly bond-buying program later this year.

"Medium term, we expect that gold prices will decline further given our U.S. economists' forecast for improving economic activity and a less accommodative monetary policy stance," Goldman Sachs analysts stated in a report, according to Bloomberg.

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