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Posted by on Jan 17, 2017 in Market Insight

Commodity Divergence

Commodity Divergence

January 17, 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.

Turning to gold it is rather obviously strong and for once it is actually stronger in US dollar terms than it is of the Yen. It is interesting too that gold is firmer as crude oil and base metals prices are weaker, and although some may want to suggest that gold shall eventually succumb to the bearish effects of weak crude and weak base metals, we shall argue instead that gold’s strength in the face of that weakness is all the more impressive.

We continue to be impressed with gold’s recent strength in light of the monetary problems still besetting India. India and Indians have been effectively removed from the market in light of what the Modi government did in late November in confiscating the two most commonly held currency denominations and in very badly handling the “swapping” of old currency for new. But eventually this shall be resolved and when it is resolved the Indians will be back in the gold market in full… and indeed in fuller… form and function. That we are certain of.

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