Gold In Euro and Yen Terms Over The Years
January 3, 2017
Dennis Gartman is editor and publisher of The Gartman Letter, and strategic advisor of the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN). He regularly contributes to AlphaBaskets and lends his institutional insight to educate advisors and investors about commodities and the forex markets, including about trading gold in different currency terms.
Reviewing some of our past TGLs, we came across those written back in January of ’10… nearly seven years ago and we noted that in early January of that year gold in US dollar terms was almost precisely where it stands presently. Given that spot gold was $1133/oz. this week and was $1129/oz. in early January of ’12, we consider that as close to parity as one might imagine it could be over seven years.
What was, and is interesting, is that gold in EUR terms then was €735/oz. compared to €1093/oz this week. In other words, anyone owning gold in US dollar terms over the past seven years has gained or lost nothing, but anyone having owned gold in EUR terms has seen his/her profits rise 48%. This is stunning really.
Gold then too was “only” ¥104,770/oz. It is this morning, ¥133,780/oz., or nearly 28% higher presently. There is a lesson here and it is that gold ownership in Dollar’s only is a view too parochial and too limiting in scope.
We must always remember that a long position in gold predicated in US dollars is effectively a bet against the dollar and in the present environment where the monetary authorities here are already erring toward tighter policies while the monetary authorities in Japan and Europe have no choice but to continue their experiments in QE the bet against the dollar is an overtly ill-advised bet.
Finally, we suspect that few… if any… would know that gold in EUR terms, being up 10.7% for the year-to-date, trails the return on the S&P by only 30 basis points and that it trumps the return on stocks in global terms, as measured by our International Index, by a rather impressive 320 bps!
We remain dismayed that as we have for the past several years made the case for non-US dollar ownership of gold it has fallen upon the deafest of ears; nonetheless, we shall continue to argue our case and the market continues to argue it even more strongly for us.