Another Lifeline For Greece?
Dennis Gartman has been directly involved in the capital markets since 1974 and has been publishing his daily commentary, The Gartman Letter, since 1987. Mr. Gartman is a strategic partner with the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN) and lends his institutional insight to educate advisors and investors about trading gold in different currency terms.
The US Dollar has fallen from its highs over the course of the past twenty four hours and it has done so rather sharply relative to the EUR, the Swiss franc and the British Pound Sterling as the situation in Europe regarding Greece has seemingly moved very modestly for the better as the Russian government has said that it will indeed forward payments on pipeline revenues that shall accrue to Greece several years in the future to Greece in the very near term instead, thus alleviating… for the moment at least… fears of an imminent Greek default.
The Euro-zone Finance Ministers are to meet this Friday and clearly the most important topics shall be Greece and the possibility of Grexit, but we do suspect that they shall also talk about the impending elections in the UK and the promise by the Prime Minister that if the Tories win he will hold a referendum on England’s membership in the monetary and political unions there. However, with the Russia’s promising aid to the Greeks, the concerns about an imminent Greek exit from the EUR are waning… at least for a while. Prior to the Russian decision… which is still not official, and indeed nothing is truly ever official until real money changes hands, but the assurances that Moscow will forward those anticipated pipeline transit revenues is enough at the moment to assuage the worst fears… there was very real concern that Greece would leave this weekend. Now that has been pre-empted, and that is always a very good thing for confusion breeds contempt and the European debt and equity markets really don’t need a bath of confusion to wash across them. Greece, nonetheless, is not near resolution, for the yield curve there is dangerously inverted and recessions follow inverted yield curves like night follows day.
Regarding gold, we’ve no wish at all to be either long or short of gold in US dollar terms, for we can make the case in both directions either to be bullish or bearish of it and embrace both sides with equal enthusiasm; hence, it is best that we stand hard upon the sidelines watching the US dollar gold bulls and bears battle each other to the death. We’ve better things to do with our time and our margins.