Did The Dollar Eat Too Much Turkey?
November 28, 2016
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 US$ is weakening as the long awaited correction is upon us with little in the way of real, consequential fundamental news to account for the correction. We shall suggest that nothing more than “gravity” and need for markets to reverse when they’ve become as aggressively over-extended as had the dollar vs. the Yen and the dollar vs. the EUR are at “fault” here this morning.
If one needs some “fundamental” rationale for the dollar’s weakness other than the over-bought nature of the markets we shall grant the notion that some new confusion is developing regarding the US Presidential election noted at some length below in our discussion of the “Political Situation.” The “Greens,” the Left and, to some extent, the Democrats are calling for recounts of the votes cast in several states and the news of those calls is having a deleterious effect upon the US dollar and upon US equity futures too.
Further, there are calls too on the part of the Greens, the Left and the left-most segments of the Democrat Party upon members of the Electoral College to cast their votes “faithlessly” for Ms. Clinton rather than for Mr. Trump. These calls are being given some rather wide foreign press coverage, making it seem to those abroad that the US Presidential election may still be “up in the air.” It is not. Mr. Trump has solid control of the votes to be cast, although at the margins some of those votes cast in the College may actually change and his majority may narrow a bit. In the end, however, the results are the results and Mr. Donald Trump will officially be elected by the College on December 19th but for now there is some confusion and that is giving the dollar a reason to correct.
As for gold, the Indian government continues not to be gold’s friend, with further “crack downs” upon currency there, but this “crack down” is forcing wholesale changes amongst the India population with Indians moving swiftly toward becoming a cash-less or less-cash society. The government continues to create its own deflationary environment with its recent actions and in the short run this has been seriously detrimental to the gold market for India has been either the world’s 1st or 2nd most important importer and buyer of gold. In the longer run, the government’s actions shall be highly supportive of gold but in the short run the decisions have been decidedly gold bearish.