Tuesday, October 23, 2007

Dude on Gartman on GATA on Gold

Written,in response to the views (in italics) below with keyboard firmly lodged in cheek.

.... While on the topic of gold, we shall nod in the direction of the folks at GATA who've argued for years -- often seemingly braying in the wilderness -- that the US government was manipulating the gold market via gold-lending operations. The government has denied that vehemently, even as GATA has trumpeted it relentlessly.

Last week Mr. James Turk, one of GATA's leading lights and a gentleman whose work ethic and tenacity we have come to admire over the years, wrote that:

"... the U.S. Treasury quietly made a subtle change to its weekly reports of the U.S. International Reserve Position, which includes the U.S. Gold Reserve. This change was first made May 14. It says the U.S. Gold Reserve is 261.499 million ounces and importantly, that the gold is now reported 'including gold deposits, and, if appropriate, gold swapped.' (Emphasis added.) This description provides clear evidence that the U.S. Gold Reserve is in play. Gold has been removed from U.S. Treasury vaults and placed on deposit, presumably in the couple of bullion banks the Treasury has selected to assist with its gold price-capping efforts. Gold placed on deposit gets loaned out by these bullion banks, and then sold into the spot market to try capping the gold price."

Sadly, even if Mr. Turk is right (and for the moment it appears that he is), gold is weak. This is enormously bullish news of gold; it is having no effect at all, however, making us recall our old aphorism that a market that will not rally on overtly bullish news is not bullish. GATA

.........While on the topic of solipsism, we shall nod in the direction of one Mr. Gartman, who has argued for years -- often seemingly spitting into the wind of a Gold bull market -- that the US government would never intervene in the Gold market, and even if so, would have no effect. GATA has urged him to reconsider his view, and even requested a public debate on the topic, but Mr. Gartman has been relentless in his ridicule of their view.

Recently, Dennis Gartman, the leading light of the Gartman Letter, and a gentleman whose work ethic is such that his views are expressed in the first person plural -- King Dennis, if you will -- noticed that additional research on GATA's thesis of Central Bank Gold price suppression by James Turk seemed to indicate that perhaps GATA had been correct all along.

In like manner to the man in Winston Churchill's well worn adage who stumbles over the truth, picks himself up and hurries off as if nothing had happened, Mr. Gartman declares that even if Mr. Turk's views are accurate, their effect on the Gold market is, obviously, nil.

How, you might be wondering, does the esteemed Mr. Gartman arrive at this view? "Elementary, my Dear Watson," as one Sherlock Holmes never said in any book written by Arthur Conan Doyle. Solipsists, like children, confuse their awareness of a phenomenon with awareness in general. When a solipsist learns something new (an exceedingly rare event, mind you) he or she assumes, as if others' awareness was dependent on his or her own, that others have just become aware. "A ha," says the solipsist, "a new piece of bullish information has just hit the market (i.e. him) and it did not rise, therefore it is immaterial."

That others might have been trading (profitably) on the truth (partial or total as the case may be) of GATA's view for years, thus obviating the solipsistic conclusion that such is new news, seems implicit in Mr. Gartman's statement that GATA has been promoting this view for years, until you realize how deep that solipsistic rabbit hole goes.


To be fair to Mr. Gartman, I too have fallen into (and wallowed for a not short period of time) the perilous trap of solipsism, which, I believe, is one of the dangers of one way discourse, or preaching from the pulpit without also walking amongst the masses.

Disembodied intelligence isn't.

On a less facetious note, the trading strategy of gaming expectations seems to me to have run its course for this cycle. When most speculators are trading fundamentals, profits can be made by gaming their expectations. But when the majority are gaming each other, they become oblivious to the overall fundamental landscape, focusing instead on, as Mr. Gartman does, the immediate reaction to bits of news.


J.C. Ernharth said...

Time to take a break from reruns of Rockford Files and short $1 mil gartmans and go long $1 mil dudes. Come to think of it, I'm going long $ 1 mil Jim Rockford's while I'm at it.