What India Means for Gold Prices
June 26, 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.
The Indians do seem to be returning to the gold market after having removed themselves following the disastrous currency conversion forced upon them by the Modi government last November. We shall grant that the conversion did some good, for it exposed corruption and it brought “underworld” transactions into the open and these are good things. But the damage done to the nation’s middle and lower classes as currency became tight was palpable. Now, however, that is receding into the background and gold buying by the nation’s farmers is more and more likely as the Monsoon has proven formidable and the crops are doing well.
Finally we cannot help but notice the violent nature of palladium’s weakness on Friday that has carried on into today’s trade. Having made a new multi-year high on Friday, palladium prices collapsed, forging a daily “reversal” to the downside and missing a weekly reversal by the barest of margins simply because the previous week’s lows were not taken out nor closed below. The weakness was not predicated upon any fundamental turn in the news and may have simply been because palladium’s narrowing discount to platinum had developed too quickly and had come too far in too short a period of time. For now, we’ll blame it upon that and move on.