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The gold market really isn't about you, Dennis

Section: Daily Dispatches

9:48p ET Wednesday, July 29, 2009

Dear Friend of GATA and Gold:

In his letter today commodity market analyst Dennis Gartman ( candidly acknowledged that his recent trading recommendations in gold have been disastrous, an awful record much mocked by the "gold bugs" he loves to disparage.

Gartman wrote:

"Commodity prices have fallen as the dollar has risen and we wonder very publicly: Is it possible for us to have traded gold more poorly than we have in recent weeks and months? From a genius gold trader two and three and four and five years ago, we've become comically inept at it, buying strength only to find the market plunging shortly thereafter, and selling weakness only to find the market rising. There comes a time when we must say that we are out of synch with gold, and that time is now.

"Let the gold bugs snicker -- we care not a whit -- but clearly we've had gold wrong in recent months. Perhaps 'tis best we leave it to others wiser -- or dumber, we really know not which -- for a while. Perhaps it is that we are simply our own worst enemy given our extreme transparency, as the market knows where our actions will be taken and waits to visit its punishment upon us.

"At any rate, we bought the breakout in gold two weeks ago, and we bought the breakout again earlier this week, and yesterday as prices collapsed we were stopped out ... again. Fortunately we kept the losses to 1-2 percent, and we can live with that. So long as one keeps one's losses to 1-2 percent, the damage wrought will always be small and the ability to hold one's trading account reasonably intact will allow us to fight another day -- and so we shall."

Any admission of error can be both endearing and humbling to those who receive it, since, if they are decent, they may be reminded of their own fallibility. But Gartman's admission is not quite as endearing as it could be, given his suggestion that his failure in the gold market may be a matter of other traders using his recommended entry and exit points against him particularly, "given our extreme transparency."

The egotism of this is more embarrassing than any bad trade. For the gold market is really not about Gartman, nor about any particular trader, but rather about the general manipulation of the currency, bond, and commodity markets by central banks, mainly, lately, the U.S. Treasury Department and Federal Reserve, and their agents, the big financial houses that enjoy special private relationships with the government, an imperial scheme for ruling the world. The participants in this scheme are not trying to expropriate Gartman particularly, but rather anyone who would dare to take a position contrary to the U.S. government's own and thereby possibly move a market in the "wrong" direction. Surreptitious government interventions are conducted at strategic moments -- like the entry and exit points identified by The Gartman Letter on the basis of technical analysis.

Technical analysis fails in markets suffering surreptitious government intervention. Indeed, such markets are not really markets at all but rather great criminal deceptions. GATA Chairman Bill Murphy was among the first to realize and publicize this in regard to the gold market soon after he started the LeMetropoleCafe Internet site of market commentary in 1999. Murphy, a former futures trader, saw so much market action that both violated technical analysis and was wildly counterintuitive that he founded GATA to confront and expose the manipulation. GATA originally figured that the manipulation was a matter of collusion among the major bullion banks, but the organization's research soon led to the governments behind the bullion banks -- research that discovered some new things but just as importantly found what was only long forgotten, what might be called the secret knowledge of the financial universe.

Lately Gartman sometimes has admitted that someone has been capping the gold market. But he usually has added that he didn't care who was doing it, and he even has asserted that it didn't matter. After all, Gartman considers himself only a trader, an opportunist in the best sense, trying to make money for himself and his subscribers according to the rules.

The people in GATA would like to make money as much as Gartman and his subscribers would, but that is not the purpose of GATA itself. Rather, GATA was formed to do what it could to save the world from the parasitism that has taken over the markets. That is why Gartman's brazen indifference and lack of curiosity -- the same qualities long displayed in gold market analysis by Jon Nadler of Kitco and, more recently, Brad Zigler of Hard Assets Investor, among others -- have struck GATA as low if not dishonest as well.

Lincoln addressed this kind of thing in February 1860 in the great speech that made him president. "Let us," he said, "be diverted by none of those sophistical contrivances wherewith we are so industriously plied and belabored -- contrivances such as groping for some middle ground between the right and the wrong, vain as the search for a man who should be neither a living man nor a dead man -- such as a policy of 'don't care' on a question about which all true men do care. ... Let us have faith that right makes might, and, in that faith, let us, to the end, dare to do our duty as we understand it."

Gartman is not as poor a trader as his recent record in gold would suggest. But now that he too has been roundly cheated, will he ask himself why he fails so disproportionately in gold, even as his trading recommendations in other markets are just as public? And what kind of a man will he be? Will he still be a man who doesn't care on a question about which all true men do care?

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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