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(Kitco News) - Gold's inability to hold its ground above $2,000 is disappointing; however, it remains an attractive safe-haven asset, according to famed commodity investor Denis Gartman.
In his latest investment letter, Gartman said that as chairman of the University of Akron's Foundation's endowment investment committee, the precious metal has outperformed in the portfolio. He noted that the university's endowment fund reduced its equity holdings by 3% two years ago and put that into gold.
"As of today, GLD was up 15.7% over that time, while the broad Russell 2000 stock index was down by approximately 18.9% over that same period," he said.
He also recommended the fund increase its gold holding to 5% of the portfolio.
In his personal investments, Gartman reiterated his bullish positioning in gold and Treasuries. He added that he is also long-term bearish on equities.
"I'm still holding 80.6% of my portfolio in 2-year notes and 2.2% in cash. I am short of 6.4% of my portfolio via derivatives and I'm long of 10.8% via gold using GLD and GDX with a focus upon the latter," he said.
Gartman's bullish outlook for the precious metal comes as prices look to regain their foothold on $2,000 an ounce. The yellow metal sold off sharply last week, falling to a two-week low as market expectations around the Federal Reserve's monetary policy started to shift.
Markets have all but priced in a 25-basis point hike at next week's monetary policy meeting. At the same time, markets are pushing back the first potential rate cut after the summer.
The gold market has also seen some profit-taking as concerns over the banking sector eased after the failure of major regional banks in the U.S. and the collapse of Credit Suisse in Europe last month.
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Gartman said that despite waning fears, the crisis in the banking sector is not over.
"The 'Breaking of Things' and the centralization of the banking system that is taking place across the country as deposits leach away in disconcerting size and swiftness from small and medium size banks and as those deposits make their way to the JPMs, the BACs and even to the WFCs of the nation are "hawkish" fundamentals which I find seriously problematic," he said.
As to the next potential economic crisis, Gartman said it's only a matter of time before commercial real estate feels the effects of higher interest rates.
While gold prices are expected to remain elevated through 2023, the precious metal might not be ready to break out to new highs just yet. Gartman said that despite growing economic risks, the Federal Reserve has been clear in its hawkish bias.
"I had maintained that the hoped-for "Pivot" to lower rates as administered by the Fed is still a year or more deferred into the future and this is despite the recent ructions in the banking and capital markets," he said.
