Mexico Mike on the latest DG flap…

Hi Bill!
Great commentary as usual today on the Cafe. I am somewhat amused at the rhetoric coming from Dennis Gartman lately about gold and his characterisation of the goldbugs as conspiratorialists, like we are irrational and in denial of the real circumstances of the precious metals markets. Memo to DG: the goldbugs have been the only ones to call the gold bull market correctly for the last 7 years or so. All of the fluff and nonsense that has passed as commentary from other sources has been debunked along the way, as gold surpassed the old highs. How many times have we been told that a top was in for gold? Get to the back of the bus DG, you have not contributed to the body of knowledge in the sector with your pontificating from on high.

I was on hand at the GATA reception in Vancouver in 2006 and listened to the debate between Chris Powell and DG regarding the US dollar, gold, and the exposure to derivatives. DG repeatedly claimed that the dollar was not a problem until it was a problem, or something to that effect. Well, as we all know, the dollar problem has turned out to be a real problem, and the financial crisis that is unfolding as we speak will no doubt make that an even bigger problem. How bold and brazen for him to now suggest that it is prudent to be on the sidelines while gold works through an inevitable correction, and the US dollar is completing a counter-trend rally that looks to be extremely overbought and long in the tooth.

I expect that DG is going to find himself in that uncomfortable position of having to either resume a bullish stance on gold, or to eat crow and digest losses if he makes good on his suggestion of selling the next rally. Nonetheless, it remains that he, like most others, has completely failed to discuss that much of what the 'conspiratoralists' have been saying for the last few years has been accurate. I would hate to nominate DG as a candidate for moron of the year, but his willingness to play the smartest-man-in-the-room may blow up on him like some of the trades he has been bragging about in the past.

I find it equally obnoxious that some people claim gold must go lower because there is so much demand to buy the dips. The fact is that almost no one is giving gold any chance at all. There is a shockingly bearish bias to the commentary for the entire sector. To me, that is as bullish as it gets. I always fade the herd, and right now the herd is definitely expecting the dollar to rebound well into the future, and that commodities are sure to sell lower. Given the strong fundamentals that remain in effect, my outlook is for a recovery off these lows that will astonish all but the most committed goldbugs. Historically, gold has always made the biggest moves when the majority of the market participants were leaning the other way. We may not have to endure the ridicule much longer and I expect to laugh all the way to the bank.
cheers!
MexicoMike