Gold prices continue their ascent to the heavens unabated, with the $3,000 target inching ever closer; however, one commodity investor says he is not chasing the market.
In his latest note, famed investor Dennis Gartman, creator of The Gartman Letter, said that gold trading seems a bit tense.
"I remain bullish long-term on gold, but the market is getting a little crowded," he said. "For months and years, I have remained steadfastly bullish on gold, but lately, as gold has become increasingly popular, I am becoming slightly less fond of it and have actually started selling call options against what I own."
The comments come as gold begins a new week at a new record high, with prices solidly above $2,900 an ounce. Gold futures are up more than 10% year-to-date, with gold for April trading at $2,926.20 an ounce, up more than 1% on the day as of 8:45 am ET.
Gartman took a similar stance in mid-October, warning investors that gold was due for a correction. Following the U.S. election in November, gold prices fell more than 7% and then consolidated until their recent breakout.
In October, Gartman told Kitco News that he recommended investors look for opportunities to buy gold during potential corrections.
Although gold appears overbought, Gartman noted that economic conditions continue to support higher prices while recession risks remain elevated.
"As far as yield curve inversion is concerned, it has become almost an economic axiom that recessions follow inversions, but the lag between the start of inversion and the official start of a recession has often been a year or more ... and it is certainly 'more' now," he said.
Although the inversion of the yield curve has been a poor indicator of recession this time, Gartman pointed out that the cycle is not complete, as the inversion has only just reversed and the curve has turned positive again.
"We know that, throughout modern post-World War II history, when the curve 'uninverts' after previous material investments, recessions have followed quite harshly," he said.
At the same time, Gartman noted that President Donald Trump's ongoing tariff wars will add to already elevated economic uncertainty. He noted that tariffs will increase inflation and slow activity. "For those in the U.S. who voted primarily on the basis of inflation and the economy, you better buckle up because bad news is coming," he said.
"If President Donald Trump follows through on two of his major campaign promises - massive deportations and tariffs - then we will likely see a return of higher costs and selective but very real shortages, starting with supermarkets."
Neils Christensen, Kitco