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Posted by on Jun 18, 2015 in Investment Perspective

Greece Fatigue

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.

We are tired of reading about Greece; we are growing weary of the games that Mr. Tsipras and Mr. Varoufakis wish to play even if the latter gentleman is an acknowledged expert in game theory. We are exhausted from the trials and tribulations of Mr. Schäuble. We are growing exhausted reading about Ms. Merkel’s attempts to find some compromise. We really do not care any more about Mr. Tsipras’ difficulties with his own far left-wing of the Syriza Party. We just want this all to end. We want to be done with it.

We maintain that were we Mr. Tsipras we would have long ago told the Brussels Group that their austerity demands are impossible; that our levels of Greek unemployment are so egregious and the damage wrought by their demands so deleterious that we have no choice but to default on our debts and take back our drachma. In so doing, Tsipras & Company would be buying Greece time to get its house in order… if that is even ever possible; and quite honestly we do have our very serious doubts at this point if Greece is even a viable country given its low levels of productivity and its preposterously high spending levels…as the devalued drachma would restore some semblance of health to Greece’s several important industries: Tourism; textiles and shipping.

However, as we have said, Germany needs Greece to remain in the single currency at all costs for a EUR without Greece in it shall become an expensive currency making German exports that much more expensive and doing very real damage to the German economy. Merkel and Schäuble know this and they will do what they can and what they must to keep Greece from exiting. At the 11th hour, the 59th minute and the 59th second, Germany will crack and the Brussels group will extend further money to Greece to keep Greece in the Euro-zone. But again, if we were Tsipras, Varoufakis & Company we’d have pulled up stakes long ago; defaulted; devalued and moved on. But we’re not Greece and we’ve not Germany behind us.

As for gold, we have drawn a bit more bullish enthusiasm for gold than we had previously if only because gold mining shares did inordinately well Monday, outpacing gold itself whether prices in dollar terms, or Euro or Yen denominated terms. Historically when gold mining shares outperform gold itself it is impressive. However, just because something is historically correct does not necessarily mean that it shall be so or that it must be so presently. Things can indeed change; precedents can be misleading. Things fall off shelves.

Concerning India…and when one considers gold one must ALWAYS consider India… although the news regarding the monsoon is bearish of grain prices, it is bullish of gold, for the monsoon is now proving to be redundant with rain; the farmers shall be gleeful. If they are and if their crops are abundant they shall have the money to buy gold as is their historical wont.