Solace In Precious Metal Spreads
August 28, 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.
Looking at the precious metals we note several interesting spread relationships, not the least of which is the continued relative weakness of platinum to gold and secondly is the recent strength of silver relative to gold. The weakness of the gold/platinum spread reflects the fears that autonomous drive cars almost certainly will diminish the demand for automobiles in the industrialized world over the years ahead, while the weakness in the Gold/silver ratio tends on balance to be correlated to general strength in the precious metals. Given our bullish stance on gold generally we take some solace in the latter.
Regarding gold, the rather obvious resistance at the “Big Figure” of $1300/oz. continues to hold gold in check, but as we’ve said we do indeed expect to see that resistance taken out to the upside. At the same time, the strength of the EUR relative to the US dollar has made the resistance in EUR/Gold at the €1095-€1105/oz. level all the more formidable, while the resistance in Gold/Yen that held gold in check for the past few weeks between ¥141,000-¥141,700/oz. is being put to very real test from below as we write with it trading ¥141,500/oz. In this latter instance, we take great solace.