Gold Bugs' Grit Pays Off

Source:

With the suppleness which makes it both derided and admired, the institutional service the Gartman Letter suddenly reinstated its gold-long position on Friday morning. Editor Dennis Gartman had been on TV programs earlier in the week expressing pessimism about gold, having abruptly sold a larger position at an early stage of the slide that started in mid-April.

When I last wrote on gold, about the only gold-friendly group cheerful about the metal's short-term prospects was the hard core that gathers at LeMetropole Café under the leadership of Bill Murphy...

Their theory of gold, that the metal is blocked by (mainly surreptitious) central bank selling on the highs, but underpinned on the lows by powerful physical offtake, mainly from India, left them unpuzzled by the late-April break and confident the low had arrived.

They were right. May 2nd's intraday $846.50 low was the bottom. Friday's $899.90 Comex close was $41.90 higher.

Furthermore, momentum is building in an exciting way. Australia's The Privateer remarked this weekend: "Have 'They' Gone Too Far With The U.S. CPI? On Wednesday, May 14, the U.S. Department of Labor ... announced the U.S. Consumer Price Index (CPI) for ... April. The official CPI figure for April was ... 0.2%. This prompted USA Today to run an article headlined: 'Inflation may be worse than consumer price index shows' "On May 14, the day that the April CPI figure was announced, spot future gold closed at $866.50. Two days later on May 16 it closed at $899.90. That's a rise of $33.40 or 3.85% in two days."

Privateer says it's been a while since gold "gapped up" -- opened above its previous close --as it did in the past week.

In my last column, I commented that the Privateer's authoritative $US 5X3 point-and-figure chart as looking "sad". That is certainly not the case now.

With the suppleness which makes it both derided and admired, the institutional service the Gartman Letter suddenly reinstated its gold-long position on Friday morning. Editor Dennis Gartman had been on TV programs earlier in the week expressing pessimism about gold, having abruptly sold a larger position at an early stage of the slide that started in mid-April. Some gold observers feel this expensive publication has extremely good trading connections. Over the years, I have noticed TGL's buy-gold calls to be very well-judged -- although every so often the conditions which motivate them seem to attract heavy bouts of selling-- which is what happened in April.

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