Dennis Gartman Likes This Under-The-Radar ETF

The Gartman Letter author discusses commodities and the macro environment affecting financial markets.

Senior ETF Analyst
Reviewed by: Sumit Roy
Edited by: Sumit Roy

Dennis Gartman is the man behind The Gartman Letter, a daily newsletter discussing global capital markets. For more than 20 years, The Gartman Letter has tackled the political, economic and social trends shaping the world's markets. recently caught up with Gartman to discuss the latest developments in the financial markets. Last week, gold tumbled pretty hard. Up until then, it was one of the best-performing assets of the year. What do you think happened last week, and are you a buyer at these prices?

Dennis Gartman: I have liked gold solely in euro terms and in yen-denominated terms. The monetary authorities in Europe and in Japan have no choice but to continue to be extraordinarily expansionary. Their economies are weak and getting weaker. Our economy is at least holding up reasonably well. By December, the Fed will probably take the overnight rate up 25 basis points.

Europe can't even consider the notion of tightening in at this point. The political and economic circumstances mandate that the ECB remain as expansionary as it can be. Therefore, gold in terms of the euro can go a good deal higher. I'm very bearish of the euro itself. Once we get under 1.095, the next stop is 1.05, and then we go to par.

Let's say dollar gold holds steady at $1,250 or so, and the euro goes to 1.05. In that instance, gold predicated in euros—and an ETF like the AdvisorShares Gartman Gold/Euro ETF (GEUR)—goes up another 5% or 6% from these levels.

So I'm bullish gold, but only in terms of the euro primarily, and then in terms of the yen secondarily. Are you neutral on gold in dollar terms?

Gartman: If you made me take a position in dollar gold—if you said, “Dennis, you have no choice, you must take a position, you must either buy it or you must either sell it”—I'd be a buyer, but only if a gun were held to my head and I were forced into taking action. Another commodity that's been in the news is crude oil, which is back above $50. Prices seem to be getting a boost from recent talk about OPEC cutting production and Russia potentially joining in on those cuts. Is there any truth to that?

Gartman: At the meeting in Algeria last week, some sort of agreement was reached, to at least at freeze or maybe even curtail production. OPEC's been producing about 33 to 33.25 million barrels of crude a day. They say they're going to freeze production at something closer to 32.5 million barrels of crude per day.

If history has taught us anything about OPEC, it's that OPEC cheats. Every one of its members cheat. They cheat when they need to. They cheat when they don't need to. They cheat when it's good for them; they cheat when it's bad for them. They'll cheat again.

What I find interesting is that everybody got excited because Russia said it was going to perhaps sign on with a production freeze. And yet [Tuesday] morning, Mr. Sechin, the president of Rosneft, Russia's largest crude oil producer, asked, "Why should I curtail production? I'm going to continue to increase production."

He is brutally aware that $50 oil plus the $4 contango for one-year forward futures gives you $54. Every fracker in the United States is wonderfully profitable at $50-55 per barrel.

If you can have $55 for the one-year forward in crude, every banker who's lent any money to crude producers here in the United States is going to mandate that they get some hedges in place. Crude oil wells that have been drilled but capped are going to be brought on to production. It's going to be very difficult to push nearby WTI above $50 by more than a buck or two.

The rally in crude oil probably is going to very swiftly run its course. You don't see much upside for crude oil from here, but do you see a lot of downside?

Gartman: At the same time, it's going to be very difficult to push WTI much below $35-40 per barrel, because at that point, you've shut off all fracking operations. You talked about how you like ETFs tied to yen-gold and euro-gold. Are there any other exchange-traded funds that you like right now?

Gartman: It's time to be a buyer of corn, so maybe it's time to look at the Teucrium Corn Fund (CORN).

If there's one thing in the world you can absolutely count on, it's that year in, year out—as long as the weather is average―we produce more grain every single year than we did the previous year.

Our farmers are the best in the world. Our agricultural universities continue to do a better job at genetically making plants better and more efficient. We apply better types of fertilizer each year than we did before, because the genetically modified crops use less water and use less fertilizer.

We're just better at growing crops. This year, we're going to grow a crop of corn totaling 15.1 to 15.3 billion bushels. It was only 10 years ago that a 12-billion-bushel corn crop was a record crop. Now we're growing 15 billion. Next year, unless the weather gets ugly, we'll grow 15.4 billion.

Corn prices have come down a long way. Everybody knows we're going to produce an all-time record crop and yet, corn doesn't make a new low. One of the oldest rules in the book is that a market that doesn't go down any longer on bearish news isn't going to go down anymore.

That's why I like corn. Shifting gears, the biggest story in the country right now is the U.S. election in November. Is that something financial markets should be paying attention to at all, or is the outcome unlikely to have an effect on the markets?

Gartman: Well, if you’d asked me a week ago what the election impact will be on the capital markets generally, I would have said it's clear that Mrs. Clinton is likely going to win the presidency.
At the same time, the Senate and the House were probably going to remain in the hands of the Republicans. Then we would have the best of all governments—we would have utter and complete and total gridlock. Markets like gridlock, because government can't do anything to you; they can't hurt you.

Now, however, with the virtual collapse of Mr. Trump's campaign over the course of the past week, I fear the Senate may actually be taken over by the Democrats.

It's also somewhat possible—maybe only a 20% probability—that the Republicans may even lose the House. If that were to occur, if we were to get a Democratic president, a Democratic Senate and a Democratic House, that would be terribly bearish for stock prices. Regardless of the election outcome, it looks like the Fed is intent on hiking rates this year. Ahead of that, we've seen the 10-year bond yield creep up toward 1.8%. Do you see much more upside for interest rates?

Gartman: Rates can go higher, but not dramatically so. It's going to be very difficult to get the 10-year much beyond 1.95, at least over the course of the next year or two.

Ten years from now, where will rates be? A lot higher than where they are right now. Where will they be a year from now? Not much higher than where they are now. What's your take on the areas of the markets that benefited from lower rates, such as utilities and high-dividend-paying stocks? It seems that investors are starting to shy away from them recently because of the potential Fed rate hike.

Gartman: Those boats are very heavily loaded. There are a lot of people in those boats. If there's a place to be fearful of, that's probably the place.

Contact Sumit Roy at [email protected]


Sumit Roy is the senior ETF analyst for, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for, with a particular focus on stock and bond exchange-traded funds.

He is the host of’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays,’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.