Edit this postOur friend Dennis Gartman has predicted a gold prices fall but another friend, Dominic Frisby in London, says 'not so fast...'
Well, gold is up about 16% on the year so far. So no bear market there.
This compares with an S&P 500 which is ever so slightly down; a FTSE 100 that's down around 10%; a commodities index that's also down around 10%; a US bond market that's up about 17%; and a US dollar which is ever so slightly up.
If we use the definition that a bear market is a market that is down 20% from its highs, then Gartman may well be right. I don't say it will happen, but there is a very good chance that gold could fall more than 20% from its early September high of $1,920 an ounce.
This would be perfectly normal. Gold has had three 20% corrections since this bull market began in 2001. Once in 2006, again in 2008, and just three months ago in September - yes, just three months ago. If you look at intra-day prices, it fell from a high on 6 September of $1,923 to a low on 26 September of $1,535. I make that 20%.
So, first, I look at the fundamentals for gold. Have these changed? No. If anything they've intensified. I won't go on about them here save to say we are going through a generational monetary unraveling and in such a situation you want to own gold. You may well also need your metaphorical tins, guns and bomb shelters at some stage, but I do not have a buy signal on those just yet.
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