The Gartman Letter: Put That Euro Trend To Work
Dennis Gartman has been directly involved in the capital markets since 1974 and has been publishing his daily commentary, The Gartman Letter, since 1987. The following provides information from today’s The Gartman Letter.
In the face of a strengthening US dollar we wonder why it is that anyone would wish to own gold in dollars when they can “fund” gold purchases with weak and weakening Yen and EURs?
We note then, that the trend of gold EUR terms since early last November is upward, taking gold from approximately €970/oz. to this morning’s €1027, or an increase of 5.9%. In the case of Yen funded gold, it has gone from approximately ¥131,000/oz. to ¥144,600/oz., or an increase of 10.4%, while at the same period of time, dollar denominated gold has gone from US$1230/oz. to $1212, or a loss 1.4%.
Simply put, the monetary authorities in Japan are and have been expanding their supplies of reserves… monetizing the nation’s debts… and the same monetary authorities in Europe at the ECB shall be doing the same thing, while the monetary authorities here in the States are arguing about monetary tighter conditions. One can simply borrow much more cheaply in Europe and Japan in order to “fund” gold purchases, and it would be illogical not to do so.
Gold in EUR terms has broken out decisively to the upside having gone through the psychologically and technically important €1000/oz. level earlier this week. It has consolidated at or near €1025/oz. since and, without surprise from US Labor Department this morning, that consolidation will likely continue to give way to further strength, not weakness.
The above communication is a publication of The Gartman Letter and is not intended to provide personalized recommendations to buy, hold or sell investments. The Gartman Letter’s information, statements, views, and opinions are based on internal and external sources considered by The Gartman Letter to be reliable, but The Gartman Letter makes no express or implied representation or warranty to those sources’ accuracy, completeness, or correctness. Such information, statements, views and opinions are expressed as of the date of publication, are subject to change without further notice, and do not constitute a solicitation for the purchase or sale of any investment referenced in the publication. Investors should verify all claims and conduct their own research before investing based on the above communication provided by The Gartman Letter.