Halftime Pt.1: Gold On Brink of Parabolic Move?

June 28, 2010

By: Lee Brodie

On Monday investors were chattering about the upside in gold even though the precious metal has already surged 12% over the past 6 months.

The bullish speculation was largely triggered by the outcome of this past weekend’s G20 summit, in which world the leaders fell back on the "Sinatra doctrine" – that is, leaving each nation to do it "my way".

That’s a pithy way of saying each nation plans to adopt different and tailored policies in dealing with the European debt crisis; and not take a unified approach.

How should you be positioned now?

Gold Front Month Fu....(GCc1)
1239.2  .   -16.60  (-1.32%%)
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Instant Insights from the Fast Money desk

In the wake of these developments widely followed commodities investor Dennis Gartman tells the Fast Money desk gold could make a sharp move higher - in fact it could be parabolic.

”I hesitate talking about parabolic moves – but when you compare this period to other periods of time in the past (when we’ve had parabolic moves), that’s what well may happen,” he says during a live interview.

Parabolic moves in commodities tend to fall into patterns, Gartman goes on to explain.

“The market starts slowly and takes several years to build.

Then, in the last 10% of the time frame you get 50% of the price movement. I've seen it time after time in 35 years of doing this. And I get the sense that gold is about to do that same thing."
Gartman also feels that gold has room to run because it's something he calls the anti trade. “It’s anti dollar, anti euro and anti the British pound,” he says.
And if you're worried that we're looking at a bubble because retail investors are driving the run in gold, don't be. According to Gartman it's largely institutional money and not money from Main Street.

What’s the bottom line?

"The propensity for people at the margin to move into gold continues," says Gartman. "The trend is up and I continue to be bullish of gold."

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