Dennis Gartman is a Raging Bull..


Courtesy of Olly Ludwig at

Dennis Gartman is about as raging a bull as you can find these days. At a time when many investors remain beaten down in the volatile “risk-on/risk-off” aftermath of the crash of 2008, and uncertain about how high taxes will go in 2013, the editor of The Gartman Letter looks at rising crude and natural gas production in the U.S. and sees the makings of the most promising economic circumstances in a long time.

Gartman told Managing Editor Olly Ludwig that he’s not exactly pleased about President Obama’s re-election, but that doesn’t mean he’s wallowing in pessimism about the goings on in Washington, D.C. He reckons that while it may take time and great effort, Democrats and Republicans will do the right thing and cut spending, even as the “leftist” president goes ahead and raises taxes on the wealthiest Americans.

In all his optimism, Gartman is also bullish on gold, but not in the way you might expect. He’s not buying gold because he thinks the economy is going to the dogs and that the Federal Reserve is unhinged. Rather, he says that Ben Bernanke’s Fed is doing a fine job, and that investors should buy gold with a weakening Japanese yen. What’s more, Gartman even has his name on a quartet of funds now in registration that will allow investors to own gold in yen, British pounds and euros.

Ludwig: Could gold end lower this year?

Gartman: No. It ended last year at $1,566 an ounce. The odds of it closing unchanged on the year, I think, are zero.

Ludwig: I ask because you don’t see gold going through the roof these days, in spite of what the Fed is doing to keep bond yields so low. It has been falling and is now around $1,700.

Gartman: Well, the Fed is buying $40 billion to $45 billion worth of securities every month, but we forget that they’re also allowing about $35 billion to $40 billion—if not more—to mature off on the back end. So the monetary base has actually not grown at all in the course of the last year.

Ludwig: So what is your general overview of how the Fed is performing?

Gartman: I think the Fed has done yeomen’s work since the autumn of 2008. Publicly, they’re very clear about buying securities on a regular basis; privately, they’re circumspect and quiet about allowing them to mature off. I think they have expanded all that they’ve wanted to. And I think they have done the right thing heretofore.

Ludwig: How might the Fed slowly extricate itself without causing some kind of a crash in the market because of a quick hike up in rates and what have you? I’m guessing you don’t buy that some nightmare scenario will happen.

Gartman: No, I just disagree completely with the nightmare scenario. I’ve only been in the markets for 40 years but I’ve heard nightmare scenarios for every one of those years. But the worst fears never seem to come to fruition. The better hopes almost always seem to come to fruition. And perhaps I’m naive in that respect. But those who have bet upon collapse have made very bad bets for a protracted period of time.

I think that the Fed has said that they intend to keep the overnight Fed funds rate low for a long period of time—into 2015. It’s probably ill-advised, but I’m not surprised that they’ve made that statement.

Gartman : You have to remember who the Fed’s constituents are. The Fed’s constituents are the nation’s middle to small banks. That’s who the Fed is concerned with. And the Fed knows that the best it can do is to make certain that the banking system remains liquid, solvent and lending.

And it also knows that the best thing it can do is keep the yield curve positively sloped. I think, probably by late 2013, we’ll start to see even the short end of the curve begin to move quietly higher. And the Fed has every intention of making sure the slope of the yield curve is positive, will be even more positive and remains highly positive years into the future.

Ludwig: So let’s circle back to gold for a moment.

Gartman: Gold has been under some pressure for the past several months as people have begun to understand that the Fed is not as violently expansionary as they had been previously. I think it’s a very crucial piece. And let’s be very clear: I’m bullish on gold—not in dollar terms; I’m bullish of gold in yen terms. And I want to make sure everybody understands that.

Ludwig: Right—I wanted to get to that and to these AdvisorShares products with your name on them that are in registration. But first, can you comment a little about what’s going on with the “fiscal cliff” and the broader fiscal picture in the U.S.?

For the entire IndexUniverse interview with Dennis Gartman, please visit IU’s website