Dennis Gartman is the man behind The Gartman Letter, a daily newsletter discussing global capital markets. For more than 20 years, The Gartman Letter has tackled the political, economic and social trends shaping the world’s markets, and Gartman himself is a frequent guest on CNBC, Bloomberg and other financial media outlets. HardAssetsInvestor Managing Editor Sumit Roy recently caught up with Gartman to discuss the gold market and the four new gold ETFs he is involved with.

HardAssetsInvestor: I recently read that you turned bullish on gold. What’s the reason for that change?

Dennis Gartman: Yes, I’ve quietly turned bullish on gold for a few reasons. Firstly, beginning five and six weeks ago we started to see a lot of the mining companies— even the largest gold mining companies— begin to curtail production. That’s always a sign of an end of a bear market. 

When senior management at the largest gold mining firms throw their hands up in dismay and begin curtailing production, usually within weeks the lows are going to be found. Decision by committee is always that way. It’s slow; it takes time; and it’s always late. 

Two, I don’t see any major reduction in accommodation that the Fed is pushing into the system. We are far from tightening; we are still aggressively easing, with $65 billion still going into the system between each FOMC meeting. Yes, that’s down from $85 billion, but still, those are massive injections of reserves into the system. The Bank of Japan is doing even more than the Fed. 

Thirdly, supplies are tight. The fact that gold futures moved to a very modest backwardation indicates how tight deliverable supplies of gold are. And finally, when you go and speak at “gold bug” conferences, the populations are down by 40%. That tells you something. Throw all those things into the pot, stir them around a little bit, and it tells me it’s time to be bullish.

Gold prices have gone down, and the market has beaten prices up about as much as they can. Bad news came out several times; you’ve had gold being downgraded by multiple brokerage firms, and it didn’t break.

HAI: Like you said, gold hasn’t reacted to bad news. The Fed is actually tapered two times, which you would think would send gold down, but instead it’s rallied.

Gartman: It’s rallied. I think that’s impressive. 

HAI: I also read a statistic that China’s gold demand was up 41% last year?

Gartman: That’s a big number. Whether one believes it or not, let’s cut it in half. It’s still a big number.

HAI: Right, it’s huge.

Gartman: Let’s say, well, I might not believe the statistics. OK, cut it in half and it’s still a big number. That’s impressive. If you look through and see where the gold is coming from, it’s coming out of Switzerland; it’s coming out of Hong Kong across the border; it’s even coming in surreptitiously. So one has to view that as being reasonably positive.

….read page 2 HERE