Nothing gold can stay, not even gold apparently.
After a record rise in gold prices as a response to the unrest in the global economy, the precious metal is headed for a fall, and poised to enter a bear market, according to Dennis Gartman. Gartman, publisher of The Gartman Letter since 1987, correctly predicted the hit to commodities in 2008.
Suffolk, Va.-based Gartman wrote Tuesday that gold may decline to as low as $1,475, according to Bloomberg. It was trading around $1,666 earlier in the day.
Bloomberg notes bullion has already dropped 13% from the record $1,921.15 reached Sept. 6 and $1,475 would extend that to more than 20%, the commonly accepted definition of a bear market.
“Since the early autumn here in the Northern Hemisphere gold has failed to make a new high,” Gartman wrote, according to Bloomberg. “Each high has been progressively lower than the previous high, and now we’ve confirmation that the new interim low is lower than the previous low. We have the beginnings of a real bear market, and the death of a bull.
“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,” Gartman wrote.
Gold’s performance this year compares with a 1.3% rise in the Standard & Poor’s GSCI gauge of 24 commodities, in which it is the third-best performer behind gasoil and cattle, according to Bloomberg.
Read Whatever Happened to Gold? at AdvisorOne.