According to Dennis Gartman, the latest gold raises are a sign that there are more woes to come, specifically in Europe. Europe's financial concerns have become the center of attention and a main factor in gold's rise.
On Tuesday investors were trying to determine what’s next for the market, with latest headlines out of Rome landing in the spotlight.
Specifically, Italian Prime Minister Silvio Berlusconi suffered a huge humiliation in parliament on Tuesday in a vote that indicated he no longer had a majority and ratcheted up pressure for him to resign.
Opposition leader Pier Luigi Bersani immediately called on Berlusconi to resign, saying Italy ran a real risk of losing access to financial markets, after yields on government bonds had approached the red line of 7 percent.
"We are still trapped in this headline box, and every movement (in the market) seems to be based on that," says Kevin Kruszenski, director of equity trading at KeyBanc Capital Markets in a Reuters interview.
Considering the market is at the mercy of overseas politicians, what can you possibly watch, to help you navigate all the confusing developments?
According to strategic investor Dennis Gartman, you should be watching gold [GCCV1 1785.90], especially how its trading in euro terms. And the way it’s trading now, suggests to Gartman that a rough ride lies ahead.
”Gold rising in euro terms says to me that the market doesn’t expect good news from Europe,” he says. "All is not well.”
Trader Patty Edwards agrees. “Gold has been marching,” she says, “also in dollar terms.”
”When gold goes higher, it signals concern,” Gartman adds.
Both traders believe money pros would be rotating into higher risk assets, if they had confidence that Europe's financial woes had turned a corner – if only because they would fear missing the next leg higher.
Trader Steve Cortes agrees. And he says the yields on bonds issued by Italy confirm the thesis. “The 2-year is now about 6.3% - that’s double from a year ago – that also says Europe is still in a lot of trouble.”
Of course that begs the question – how should you trade it?
”All I can say is that 2-weeks from now gold will probably be higher than where it is now and in a month, higher than where it will be in two weeks,” says Dennis Gartman.
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