Dennis Gartman thinks that gold has plenty of gas in the tank. This week’s gold price rally, sparked after a fresh exchange of sabre-rattling between North Korea and the U.S.A., seems to only prove his point.
Gartman, editor of the vaunted Gartman Letter, believes gold could be “demonstrably higher” in 2017. In a recent interview, he states that $1,400 an ounce could be achieved in the next year. This could consequently mean a gain of roughly 7% from current price levels.
Not bad, considering that gold prices have already outpaced the flagging stock market in 2017 by almost two percent.
In Gartman’s view, gold continues to attract investors seeking refuge from market volatility. He believes that owning physical gold is an ideal hedge if paper wealth is rendered worthless by our central bank’s current inflationary fiscal and monetary policies.
Gartman owns gold because of what he perceives as excessive risk in an era of central bank meddling and easy money. According to Gartman, central banks are pursuing expansionary policies that could undermine major currencies like the euro and the dollar. Even with a Federal Reserve rate hike on the horizon and a vow by the Fed to begin to reduce its $4.5 trillion balance sheet in October, Gartman doesn’t see a problem for gold prices. In his interview, he says that the process of balance sheet reduction could take five to six years!
Gartman notes that gold has risen 13 percent so far this year and has done better than the S&P 500 Index, a fact that does not get a lot of attention from Wall Street.
OVERPRICED STOCK MARKETS, OVERHEATED GEOPOLITICAL TENSIONS
Rising tensions between North Korea and the United States have caused investors to gravitate towards gold as a safe haven from geopolitical uncertainty.
Last week, North Korea announced it may test a hydrogen bomb in the Pacific Ocean. This week, it claimed that the U.S. has already declared war on it and threatened to shoot down U.S. bombers. Japanese leader Shinzo Abe called a snap general election in a bid to consolidate power in the midst of a diplomatic crisis with North Korea.
Both the S&P 500 Index and the Dow Jones Industrial Average recently touched all-time highs, and many experts are worried:
1.Nobel-winning author Robert Shiller thinks stocks look dangerously close to a bear market. He says stocks look just like they did before the 13 most recent bear markets.
2. According to Bank of America Merrill Lynch’s April fund manager survey of global investors, a record 83% said U.S. stocks are overvalued.
Gold could be an important hedge for times like these, with a stock market ripe for correction and priced to beyond perfection.
HAVE A FINANCIAL STRATEGY FOR TIMES OF TURBULENCE
What is your strategy to cushion the blows when the next stock market correction or financial crisis occurs? The Great Recession of 2008 taught us that complacency in the face of growing risks is the perfect way to destroy wealth.
Nuclear war is unthinkable. However, rising tensions between North Korea and the U.S. could make owning some physical gold a prudent way to hedge risk if a real war breaks out.
The dollar is showing weakness and the stock market is overpriced. There are no easy solutions to the inability of Washington, D.C. to govern, or the bellicose rhetoric of two leaders armed with nuclear weapons, or the profligate determination of central banks to print money out of thin air.
Physical gold and silver coins are portable, liquid and good to have on hand in the event of a crisis.
Have a plan for your financial security in case of emergency!