Monday, June 24, 2013

Regarding Dennis Gartman

A colleague sent me a rhetorical question last week:  How do you turn a really large pile of money into a really small pile of money?  Answer:  Have Dennis Gartman manage it.

Horizons introduced some ETFs based on the trading calls of Dennis Gartman's daily newsletter.  For some reason Gartman is promoted by CNBC and Bloomberg, among others, as some kind of market guru.  As it turns out, the ETFs based on his trading calls were referenced several times, including once by Business Insider, as being "a disaster."

As it turns out, in March this year, Horizons liquidated the main Gartman ETF:

Comments: Effective close of business  03/19/2013, ETF will be terminated and all unitholders of the ETF will receive the proceeds from the liquidation of the assets, less all liabilities and all expenses incurred in connection with the dissolution of the ETF.

Keep that in mind the next time you see Gartman on CNBC pontification about gold.  In fact, I'm not the only one taking shots at guys like Gartman - who by the way is a seller of the newsletter he writes and has nothing to do with managing real money - Marc Faber last week issued a shot at all the so-called gold experts showing up on CNBC and Bloomberg with their bearish calls:

..there are many people out there, they never owned an ounce of gold in their lives. They were bearish about gold at $300, bearish about gold at $700, bearish about the stock market in 2009 when the S&P was at 666. Now, they are bullish about stocks and they are still bearish about gold. The commercial hedgers - these are professional miners, mining companies and people involved in gold trading. They have the lowest short exposure, since 2001 when gold was at $300. Similarly, in the silver market, the commercial hedgers, again, the professionals have the lowest short exposure since 2001. I would rather bet on the commercial miners, the commercial hedgers than on some forecaster who knows about the future of prices as little as I know. The only thing that I know is that I want to own some physical gold because I don't want all of my assets in financial assets.
Here's the link to that:  Faber on Gold etc

Regarding Dennis Gartman, he reminds me of two old but very appropriate, time-honored quotes:  "Big hat, no cattle" and "those that can, do;  those that can't, try to tell others how to and seek to get paid for it."


  1. 10-Year Treasury Yield Up 100 Basis Points Since May; What's That Mean for Mortgage Rates and Housing Affordability?
    The FNMA 3.5 coupon was trading at 106 22/32 on May 2nd, and this morning it was trading at 99 9/32. Ginnie Mae is worse. The GNMA 3.5 coupon was trading at 109 1/32 on May 2nd, and this morning it was trading at 99 24/32.

    In terms of interest rates, I locked an FHA purchase on May 2nd and the rate was 3.25%, and that rate carried a 2 point lender credit to help pay for closing costs. In order to get the same deal today, (a 2 point lender credit) the rate would have to be 5% today.

    This as an apples to apples comparison illustrates that FHA rates have increased 1.75% in 7 weeks. You could get 4.625% on an FHA purchase, but you wouldn't get any closing cost help.

    Most of this pain has occurred since the FOMC meeting last Wednesday, and I am sure the talking heads at CNBC have no idea how much interest rates have spiked. They keep saying that housing is strong enough to withstand this rise in rates, but I think they are deluding themselves.

  2. Gartman has always been a schill. I like to read opinions of people who have had success in investments and or other areas of business. After I listen the real due dillgence begins.

  3. The Great Unwind Has Finally Arrived

    As a result of the mere murmur of slowing QE the most shocking action last week was in the Treasury market. The 10 yr. ended Friday at 2.54%, this was a rise of .40 basis points or so and nearly equal to the rise in yield for all of May. May if you recall was the month where the Fed lost about $115 billion on their bond holdings (certainly far more if they had to mark the non-Treasuries to market). The volatility was staggering and without a doubt there are now some dead institutions out there because of how fast and violent the move was. There is $200 trillion outstanding in interest rate derivatives. This past week alone, these contracts on average probably moved more than 5% in value. This would indicate a movement of maybe $10 trillion (with a T) worth of net change from one side to the other in less than 5 days. Do you really believe that this type of “wins and losses” could have occurred without someone, probably “many one’s” becoming insolvent? The Fed only purports to have $65 billion of equity capital, in between May 1 and now their portfolio has dropped nearly $250 billion. Is this “insolvent?” Yes it is but they have the ability to run the presses so not to worry I guess?

  4. Dave, I start to feel that $1000 will be breached in the summer. Summer is usually the slow period for gold and silver. Indian farmers focus on farming not buying gold. The demand in China is often comparatively low in summer. This is a perfect time to rig the gold market because if you hammer the price low in summer, you won't worry about creating huge demand for physical. Bullion banks often target key supports and psychological levels. $1000 will be an ideal target. Hedge funds and other momentum traders have recently started to short gold in the down trend. Last Thursday, prices moved sharply but open interest increased. If I were the cartel, I would create more downside and break the 1000 level to trap more speculative shorts before starting a massive short squeeze.

    1. Maybe. Who knows. The last two years gold started a move higher in the middle of the summer. Not sure I agree China has seasonality. Right now China alone is importing an amount equal to the monthly global mined supply.

      Right now the HUI sell-off top to bottom is almost as bad as 2008 - not quite. The rGold metric is .76 - the lowest in the 13 yr bull market. In 2008 it down to .81. Anything in the low .90's is usually a very strong buy.

    2. I agree with commenter Anonymous that China has seasonality. I'm Chinese and live in Shanghai at the moment. According to my observation and chat with some jewellers, summer seems to be a slow season. Strong demands are often seen in autumn and winter because there are a lot of holidays and festivals: Mid-autumn festival(Sept/Oct), National Day(Oct 1-7) Halloween(You read that right. Younger generations have become more westernised so they celebrate Halloween), Christmas, New Year's Day, Chinese New Year(Jan/Feb) and Valentine's Day. Summer is too hot for going outdoors. 37C (98F) is common and 40C (104F) is not rare. Besides that, there is almost no national holiday or festival. Of course, big movement in gold price can change the whole picture. Besides that, banks sell most of the gold bars and more and more people have started buying gold online. Therefore, my observation is not necessarily the whole picture.
      Finally, you can read the annual reports of Shanghai Gold Exchange to get some idea of the Chinese gold market.

    3. Sure, there may be seasonality to jewelry consumption, but not Central Bank accumulation

  5. Dave, shame on you for even mentioning any talking head "gurus" on CNBC. They should run this disclaimer scroll along the bottom of the screen: "Advice given on this program may be harmful to your financial health."

    CNBC = "Cramer Nonsense and Bullshit Channel"

  6. Anyone that makes consistent money trading focuses on that - Trading, NOT SELLING newsletters. I have subscribed and read many newsletters over the years. None of them consistently make money. The real money they make is from subscriptions. Notice how few ever offer historical returns? That says it all.

    1. Agreed - Gartman's Trader Disclosure: Long "The Gartman Letter" in US Dollar terms.