Investors Prepare: 'Gold Is About To Break Out' - Gartman
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(Kitco News) - Gold bulls were pleasantly surprised on Monday as profit taking turned out to be fairly tamed, after the yellow metal hit a nine-week on Friday. Now, some analysts are saying big things are in store for the precious metal.
“Gold is about to break out on the upside strongly,” Dennis Gartman, the editor and publisher of The Gartman Letter, told CNBC.
Gartman added that every portfolio should have about 10-15% allocated to gold.
He explained that gold has been in a bull market for almost two years now, but it has been somewhat “unrecognizable.”
“If you look at bull markets in almost every commodity, the great movement occurs in the last 10-15% of the timeframe. The beginnings of a bull market are very difficult, but we don’t make new lows. And that is what has been happening to gold,” he said.
One of the big drivers for the yellow metal will be inflationary pressures, especially those coming from an increase in wages, according to Gartman.
Also, traders will be looking to move their money into safe-haven assets like gold as the tensions between the U.S. and North Korea persist, he pointed out.
“One never knows when geopolitical risks will arise. One never knows when something untoward will happen economically,” Gartman said. “The stock market looks a little vulnerable. The geopolitical circumstances are getting worse and worse.”
Gartman’s comments come as other high-profile investors, like Bridgewater Associates founder Ray Dalio, issued similar advice.
Dalio warned investors last week to be prepared for possible geopolitical risks, citing the latest ongoing tensions around North Korea.
“We aim to stay liquid, stay diversified, and not be overly exposed to any particular economic outcomes. We like to hedge our bets, though we are never completely hedged. We can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and treasuries) would benefit, so if you don’t have 5-10% of your assets in gold as a hedge, we’d suggest that you relook at this,” Dalio wrote in a LinkedIn post.
DoubleLine Capital CEO Jeff Gundlach is also among experts that are rooting for gold. Last week on Twitter, the “bond king” pointed out that a bullish pattern was forming for the yellow metal.