Gartman Bearish On Oil, Likes Gold & Stocks

Guru shares his thoughts on the 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. After a tumultuous start to the year, it's been pretty quiet in financial markets recently. But that could change soon, with some predicting the Fed might hike rates in June or July. Is that what you see also?
It's not a question of if, it's a question of when the Fed hikes. While it could happen in June, the odds are obviously much greater that it'll be in July.

Everybody argues that it can't happen in July because there hasn't been a press conference scheduled for July (there’s one scheduled for June). In the last decade, the Fed has liked changing monetary policy when there’s been a press conference scheduled, but that doesn't mean there can't be a change without one.

The odds are it'll happen in July after the British vote for remaining in or leaving the eurozone, and after the Spanish elections. How much will they raise rates? Probably 25 basis points. What impact do you think a hike will have on financial markets? Do you think it’ll roil the markets?
I can't imagine―given the amount of press coverage, given the amount of media coverage, and given the amount of television coverage―that it’ll have any effect whatsoever. If markets are supposed to discount the future, clearly a rate increase has been well-discounted. We saw gold surge earlier this year, but it's pulled back a bit recently. Why do you think so many investors have been buying gold this year, and what's your outlook for prices going forward?

Gartman: People bought gold because they were concerned about equity prices. Gold was rallying very hard in January and February as the stock market was stumbling. When the stock market firmed up, the propensity to add to any long positions in gold was greatly reduced.

There's also been some rather aggressive sellers―primarily the Venezuelans―who've had no choice but to sell gold. They can't raise foreign capital or hard currency, and Venezuela needs hard currency.

Venezuela has made so many stupid decisions in the course of the past several years under Mr. Maduro. The country is the great producer of sludgy, heavy crude oil. To sell that crude oil, it has always had to mix it with better blends from abroad.

But it can't seem to buy any more because it doesn't have the money to do it. Thus, it’s been a seller of gold from its reserves, which makes Venezuela the dominant seller right now. They may have another month or two selling, at most. Once that's out of the way, gold prices probably will go higher.

Most of the monetary authorities, with the exception of the United States, are going to be easing monetary policies. The Japanese have no choice but to do so. The government deferred the sales tax increase that was supposed to go into effect next April for at least 2 1/2 more years. That will give the monetary authority at the Bank of Japan the ability to expand reserves even more aggressively. The Europeans have to do the same thing.

I like gold, but gold in euro terms and gold in yen terms is a far better trade than is gold in dollars. Another commodity that's been rallying this year is oil, which nearly doubled off its lows. Is the glut finally over?
No. In fact, if anything, there's a glut soon to be gotten again. The Iranians are surprising everybody by how swiftly they had been able to ramp up production. They're almost back to the levels of presanctions, and they're going to get past those levels very soon.

The Saudis have made it abundantly clear that they intend to increase production because they see their own crude oil as a wasting asset that will basically be worthless in 25 years. They're going to be selling it as quickly as they can to get what money they can right now.

In the U.S., anything above $45-50 for spot WTI with a decent contango on the one-year and two-year forward curve gives you a very profitable level for almost any kind of fracker in any reasonable territory in the Bakken or in the Permian to produce.

You've also got 25-35 tankers filled with crude sitting just outside Singapore that’ll come to the market at any time. Is the oversupply over? No, it's going to get much worse. On balance, it's going to be very hard to push crude oil much above $50. Where do you think oil prices are headed?

Gartman: I wouldn't be surprised if we stabilized between the low $40s and the very low $50s for a long period of time. The U.S. stock market has not gone anywhere for a year or more. Which way do you think the market will ultimately break?

Gartman: If it's going to go anywhere, it's probably still going to go up, because that's been the trend.

All the fundamentals would seem to indicate the market should go lower, but it doesn't want to go lower. Too many people are short. Too many people have no place else to go with their money. The trend seems to be from the lower left to the upper right. The next big move is probably still upward.


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.