Influential investor Dennis Gartman is “agnostic” on gold, given recent market volatility, according to remarks at a New York commodities conference on Monday.
Contrary to what gold bugs claim, gold is simply not a safe haven of value, said Gartman, because prices have fluctuated 2 to 3 percent within a single trading day, as has happened often in the past year.
Despite a longtime bearish view on gold, Gartman said he remains bullish on the precious metal but only in Japanese yen terms.
“Gold in yen terms at least has gone sideways,” over the past few years, he told industry experts at the IndexUniverse Inside Commodities Conference in New York City. “Gold in dollar terms has been definitively a detrimental and ugly long investment.”
Exchange-traded funds (ETFs) have helped drive market volatility, said Gartman. But he also credited them with democratizing and improving gold markets, compared to their inaccessibility only 15 years ago.
Gartman is bullish on gold in yen partly because he sees loose monetary policy as positive for commodities and highlights Japan as an obvious place where that strategy applies.
“I am overtly, manifestly, insistently, bearish on the Japanese yen,” said Gartman, citing pledges by Japan’s central bank to double their asset base within this fiscal year.
“The Japanese have no choice but to devalue their currency, and commodity prices in their terms are going to go dramatically higher,” said Gartman.
He described the ongoing depreciation of the yen as an economic “defining factor of the next several years.”
The United States will also become a net exporter of energy within five or 10 years, added Gartman, thanks to a hydraulic fracking and natural gas boom here.
The U.S. is already a net exporter of gasoline, though exports of crude oil are banned by law here.
“It’s only a matter of time until the United States is a net supplier of energy,” to the rest of the world, said Gartman. “Given the growth in the fracking industry, we’re very soon going to be energy independent.”
The Federal Reserve’s decision to delay tapering led to a irrationally positive bounce in commodity markets late last week, according to a Barclays PLC (LON:BARC) report from Friday. They expected the broad lift to be short-lived.
Economist Julian Jessop with London’s Capital Economics held the same view. He wrote on Friday that the tapering delay is “unlikely to have any major implications for commodity prices.”
Still, he noted that precious metals could gain the most in coming weeks.
“Quantitative easing has been a far less important driver of industrial metals and oil prices, where the prospects for supply and the strength of the global recovery remain key,” he added. "And for most agriculturals, supply currently trumps everything.”
On Monday, gold opened at $1,327 per ounce, Brent crude oil opened at $109 per barrel, and one U.S. dollar bought 98 yen.