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Dennis Gartman out of gold, proclaims 'death of a bull'

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Gartman out of gold Dennis Gartman is out of gold, seeing "the beginnings of a real bear market, and the death of a bull."

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In his Gartman Letter published today, Mr. Gartman warns that the incredible run-up in gold over more than a decade appears to be at an end. He noted that China has been buying gold aggressively over the past several weeks, which should have sent the price surging.

"Instead they plunged," the publisher of the letter wrote today. "One of the oldest rules of trading is simply this: A market that cannot or does not respond to bullish news is a bearish market not a bullish one."

Mr. Gartman, who, as Bloomberg News noted, correctly called the 2008 commodities slump, said that "we are out of gold" as of yesterday.

"Where then can gold go?," he said in his note as prices were little changed today after yesterday's tumble.

"Lower, we fear and perhaps decidedly so. So much damage has been done to the psychology of the market in the past week and so many late longs have been caught off guard that we think wholesale liquidation … and perhaps forced liquidation … shall be the outcome. We can imagine gold trading back toward €1075-1125/oz and/or toward US$1475-1525. It really won't take much to push it there. Panic liquidation would do so rather swiftly. We'll simply stand aside from the gold market then, preferring to be long of gold and not wishing really to be short of it. The sidelines seem the cozier of the two."

Not everyone feels that way, of course.

"People will come back to gold since eventually it will be clear that there has been no improvement in the European situation," Lance Roberts, the chief executive officer of Streettalk Advisors of Houston, told Bloomberg.

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Income burden climbs, net worth sinks As the song goes, another day older and deeper in debt.

The credit burden of Canadian consumers rose in the third quarter as they took on more debt with little change in what they were bringing in, and household net worth slipped. This is not a good sign amid rising unemployment and forecasts that expect economic growth to slow.

The ratio of debt to personal disposable income, the key measure of where a consumer stands, climbed in the third quarter of the year to a record 152.98 per cent from 150.57 in the previous quarter, Statistics Canada said today.

Mortgage credit rose to $1-trillion and other consumer debt to $448-billion, the federal statistics gathering agency said.

Household net worth in the quarter fell by 2.1 per cent, marking the second consecutive decline, as stock values more than offset the gains in house prices.

"Per capita household net worth declined to $180,100 in the third quarter from $184,700 in the second quarter," Statistics Canada said. "This marked the sharpest quarterly reduction in stock prices and per capita household net worth since the fourth quarter of 2008."

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Only yesterday, Bank of Canada Governor Mark Carney warned that too much of the capital coming into Canada is being used to fund household spending instead of building productive capacity, he said.

In an interview with CBC today, Mr. Carney said that while consumer debt levels are still the biggest threat to the broader economy, they're not a "clear and present danger" like the euro debt crisis.

How the 1 per cent fared A study by The New York Times today showed the top 1 per cent of Americans, who have become such a target for the Occupy movement, took a big hit during the financial crisis and recession.

But it's all relative, of course.

Millions of the 99 per cent were thrown out of work, and foreclosures became a flash point in the housing bust. For the wealthy, average income fell in 2009 to $957,000 (U.S.) from $1.4-million two years earlier, the newspaper said, using federal tax data for its findings.

That group's share of national incomes slipped to 17 per cent from 23 per cent, and, of course, most of the losses are believed tied to the plunge in stocks. That means incomes in that group have probably recovered somewhat since the depths of the crisis.

"It's very interesting that this has become such a big topic now when the numbers are back to where they were in the 1990s," economist Steven Kaplan of the University of Chicago's business school told the Times. "People didn't seem to be complaining about it then."

Markets await Fed Don't expect much this afternoon from the Federal Reserve, which holds its final meeting of the year.

The U.S. central bank won't change its benchmark mrate from its current emergency low near zero, though markets will be watching the language of the accompanying statement. Here's the take from senior currency strategist Camilla Sutton of Scotia Capital:

"Some signs of strengthening economic growth, labour market improvements and moderate inflation are likely to be offset by the very slow pace of these gains and international turmoil stemming from Europe. We do not expect any hint towards [quantitative easing] but think there is a reasonable risk that the Fed leans towards the potential for liquidity measures and clarification on their communication techniques."

Retail sales disappoint The holiday shopping season in the United States got off to a weaker-than-expected start.

U.S. retail sales climbed 0.2 per cent in November, the kickoff to the season and the month of Black Friday. It was the sixth straight month of gains, but not enough to take the sting out of today's report.

"I wouldn't go as far as to say the U.S. retail sales report was Grinch-like, but the 0.2 per cent gain was disappointing," said senior economist Jennifer Lee of BMO Nesbitt Burns.

Business ticker

In Economy Lab Many Canadians would agree that the Harper government has done the right thing to take us out of the Kyoto game, but what comes next? Warren Mabee examines the issue.

In International Business Fears of battery fires are probably overblown, but of greater concern are the expense and inconvenience of purely electric vehicles and efficiency gains in traditional internal combustion engines, The Financial Times writes.

In Globe Careers Canadian employers anticipate a cautious hiring climate in the months ahead, with optimism the highest in the resource-rich western provinces, Tavia Grant reports.

In Personal Finance The IRS may have eased tax rules for U.S. residents in Canada, but American citizens still have to file a return.

From today's Report on Business

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More

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