Montreal, Canada

Another trader has turned cautious on commodities. Dennis Gartman of the Gartman Letter and money-manager to several hedge funds, cautioned investors this morning that commodities might have reached a short-term peak.

Gartman pointed to the upcoming massive Glencore IPO this week in Hong Kong and London as evidence that the “smartest people” are cashing-out while the getting is still good.

Glencore is estimated to sell about $11 billion dollars to the public in the biggest commodity-related IPO in history.

Yesterday, SEC 13F filings revealed that legendary hedge fund manager, George Soros, liquidated most of his positions in GLD, the SPDR Gold Trust.

Soros, along with other hedge funds, were largely responsible for triggering the latest leg of this commodities correction after claiming Soros Fund Management sold its gold and silver. Soros also dumped several mining stocks.

But at the same time, smart money-man John Paulson, who launched a gold hedge fund a few years ago in anticipation of a secular long-term bull market in gold, added to his holdings in Barrick Gold (NYSE-ABX), among others. The filings also revealed that Paulson remains heavily invested in GLD and didn’t reduce his holdings. Paulson is the man who successfully identified the bubble in mortgage-backed securities in 2006-2007 and scored billions in the residential real estate bust.

So who do you think is right about gold?

I’m going with Paulson.

Soros talks his book regularly. Back in January 2010 in Davos, Switzerland, he claimed gold was entering the “bubble” phase; at the same time Soros Fund Management was increasing its stake in GLD.

There’s always a possibility that Soros is right about gold and silver. Perhaps the cycle is truly drawing to an end and the United States and the rest of the world finally have a handle on their finances and bloated deficits.

I don’t think so. Soros is taking profits. You don’t get poor taking money off the table after a big rally.

With deficits still rising virtually everywhere and real inflation-adjusted interest rates still negative in most countries, including the United States, gold and other hard assets will continue to thrive in this environment. This is a long overdue correction for raw materials. Don’t be dissuaded by short-term price action; if anything, target your favorite sectors now for re-entry over the next several weeks. I’m looking at gold mining, agriculture and oil services.