Gartman: Gold A Buy, Bitcoin A Bust

Also, why oil won't fall below $60 for awhile.

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

Dennis GoldmanDennis Gartman is the man behind The Gartman Letter, a daily newsletter discussing global capital markets. For more than 30 years, The Gartman Letter has tackled the political, economic and social trends shaping the world's markets. recently spoke with Gartman to discuss the latest developments in the financial markets. The S&P 500 just hit a record high. Would you be a buyer of U.S. stocks right here?

Dennis Gartman: No, but neither would I be a seller of them. The market is extremely overbought and overextended.

I wouldn't mind owning U.S. stocks and being short of stocks elsewhere. I don't mind being long of the U.S. and short of Europe or long of the U.S. and short of Asia. But would I be a buyer outright? No. How do you see this whole tariff saga playing out? Do you think that as trade tensions escalate, it will have a material impact on either the economy or the stock market?

Gartman: Only if it gets worse than it is. It’s a slippery slope I hope we don't fall down upon and slide into economic uncertainty.

I hope, and I do expect, that cooler heads will prevail—that eventually, President Trump will see the error of his ways in demanding these tariffs. Trade protection rarely, if ever, through history, proves to be anything other than detrimental to economic growth.

Let us also hope that the Chinese pull back from the edge of the diving board. I think cooler heads will prevail, but one has to be mindful that something can go wrong. Gold has had a pretty dismal year, with prices down 8%, and last trading below $1,200/oz. Why has it been dropping, and is it a buying opportunity?

Gartman: Investors should have some of their assets in gold—5-10%. Owning gold in dollar terms for the first time in a while makes sense.

The fact that we have held above $1,190 for the past several weeks, even as the news on inflation here in the U.S. has been tepid, is supportive of the gold market.

We've seen enormous sales on the part of the Reserve Bank of Turkey. We know that the Reserve Bank of Venezuela has been a huge seller. The Venezuelans are probably down to dregs as far as their reserve holdings of gold are concerned, so there's probably not much selling to come from the Venezuelans. And I doubt the Turks are going to be an aggressive seller any further.

The forced sellers, for lack of a better term, have probably been sated. If you own 5% of your assets in gold, maybe you should raise that to 10%. To answer your question, gold is a far better buy than a sell—no ifs, ands or buts. Meanwhile, oil is heading the other way. Brent is close to $80 and WTI is over $71. Do you think it’s more likely to hit $100 or $60 going forward?

Gartman: I think we're more than likely to hit $85; I'm not sure that we'll hit $100.

The Saudis said they’d accede to $80 crude oil. I don't think they were talking about Brent; I think they were talking about the OPEC basket itself. The OPEC basket is about $76-77 a barrel depending on which day one looks at it.

That means oil prices could go up $3-4 before they get to $80. Markets tend to overshoot in both directions—maybe that means the OPEC basket can go to $82. But are we going to see $100? I seriously doubt that.

There are so many wells that have been drilled and capped in the U.S. that can come on line very quickly. We're starting to see fracking operations take place, strangely enough, even in the U.K. Can you believe that? And the Russians have barely scratched the surface as far as fracking is concerned. Fracking operations will escalate very quickly any time you get above $80-81 a barrel on the OPEC basket.

Are we likely to see $60? Not for quite a long period of time. Keep an eye on what the term structures are doing. The term structures continue to widen, the backwardations continue to expand. As long as the backwardations on crude futures—whether it's WTI, Brent or even Dubai crude—continue to widen, you can't be short of crude. Is natural gas still dead money below $3/mmbtu?

Gartman: It seems to be, doesn't it? It gets to $3 and it backs right off. I see no reason to believe it’s going to break through, because it's easy to drill for natural gas here in the U.S.

Strangely enough, $3 is still a profitable enterprise. There are so many nat gas wells that have been capped, that anytime you get anywhere close to $3, that uncapping process occurs. Emerging market stocks are down nearly 20% from their highs of the year. Do you see bargains in that space?

Gartman: No, you don't try to catch the falling knife. I hear people explain to me all the time that owning emerging markets equities will, in the long run, pay off.

Do I think the Shanghai index will be higher 20 years from now than it is now? If course it shall. Do I think the Malaysian stock market will be higher 20 years from now than it is now? Of course, it shall. Do I think they'll both be weaker six months from now than they are now? Almost certainly they shall be.

If you had the ability to shut your eyes completely and absorb another 20% on the downside, I wish you well. Suffering through the 20% decline, however, will be serious; it will be difficult; and it's something I couldn't stomach. Most cryptocurrencies, including bitcoin, have cratered this year. You’ve been consistently bearish on the asset class. Have you changed your views after the recent decline?

Gartman: No, I see no opportunity whatsoever. I think the cryptos are essentially worthless enterprises. I wish the world would stop equating bitcoin and blockchain, but they seem to be synonymous.

They shouldn't be. They're absolutely two completely divergent circumstances. I think the cryptos are all worth basically zero. You can't use them for purchases of anything. Perhaps 20 years from now, the cryptos will be worth something.

But do I still think that the trend is bearish? Do I still think that $6,000 for bitcoin is a very high price? Yes.

Email Sumit Roy at [email protected] or follow him on Twitter sumitroy2

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.