Dennis Gartman is widely followed for his keen understanding of commodities, especially gold. And he tells us the way he’s trading the precious metal has just changed.
“For the first time in a long time, I’d rather own the miners than bullion, or gold contracts or the GLD,” he says.
And that’s because Gartman, author of The Gartman Letter, has spotted a major shift in the gold trade.
“For the previous 4 to 5 years even as the spot price [GCCV1 1603.50 -19.70 (-1.21%) ] has climbed to new highs gold miners [GDX 47.68 -0.05 (-0.1%) ] have deteriorated,” he explains.
But no more.
“Over the past few weeks as the gold market advanced, the gold equities – that is, large cap gold miners – performed better than bullion,” he explains. “I watch that sort of thing to see how efficient and how well entrenched the gold rally is.”
The action suggests that although the better trade had been long the spot price of gold, it no longer is. Now miners are about to outperform and the better trade is long gold equities.
If all that's confusing, another way to say it is -- Gartman is now more bullish of gold miners, which can be played long the GDX [GDX 47.68 -0.05 (-0.1%) ], than the spot price itself.
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