Gold prices continue their relentless climb toward the sky, with the $3,000 target getting closer and closer; however, one commodities investor says he is not chasing the market.
In his latest note, renowned investor Dennis Gartman, creator of The Gartman Letter, said that the gold trade seems a little tense.
“I remain optimistic about gold in the long term, but the market is getting a little crowded,” he said. ”For months and years, I have remained firmly optimistic about gold, but lately, as gold has become increasingly popular, I am becoming slightly less fond of it and, in fact, have begun selling call options against what I hold.”
The comments come as gold begins a new week with a new record high, with prices solidly above $2,900 an ounce. Gold futures are up more than 10% so far this year, with April gold trading at $2,926.20 an ounce, up more than 1% on the day as of 8:45 a.m. ET.
Gartman took a similar stance in mid-October, warning investors that gold was due for a correction. Following the U.S. elections 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.
“When it comes to the yield curve inversion, it has become almost an economic axiom that recessions follow inversions, but the lag between the start of the inversion and the official start of a recession has often been a year or more... and certainly now it is 'more,'” he said.