Pages Menu

Posted by on Jul 19, 2016 in Market Insight

Understanding the Failed Coup in Turkey

Understanding the Failed Coup in Turkey

July 18, 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 dollar is strong almost across the board falling only relative to the Japanese Yen and even then the Yen/dollar has moved barely at all when compared to Friday.  The dollar’s real movement is relative to the Euro where 1.1050 is being tested and almost certainly shall be tested and “given” at some point later today.

The EUR’s weakness is of course predicated upon the implications to be drawn from the coup on Friday evening in Turkey, for although the coup has failed and has failed rather miserably, it is, we think, indicative of the problems besetting Europe and is strongly suggestive of capital moving away from Europe and moving to almost any other place and certainly willingly moving to the Americas.

European foreign ministers will all be meeting this morning in Brussels to discuss what has happened in Turkey and what this means to them. As shall always be the case, nothing material shall come from this meeting other than the usual post-meeting statement that the ministers and their governments are watching developments there; that they are grateful that the coup has failed; that the government remains intact and that vigilance is and shall be necessary. Otherwise, nothing shall come of the meeting.

Even so, it is good to know that these sorts of meetings can and will take place; that the lines of communication remain open and that if things were indeed to have come
fully apart in Turkey that there were some in positions of authority who were watching those developments.

Turning to gold, we have for months begun this comment with the statement that we were about to write something that would surprise no one because we have been relentlessly bullish of gold in non-US dollar terms for the past several years and have been bullish of gold in US dollar terms for the past six months or so, but that thesis has been vindicated.

Some have accused us of laziness in not changing our thesis over that time; others have taken us to task for “tweaking” the positions at the margins. However, today we are making a very clear statement: the fact that gold in US dollar terms traced out a relatively rare “weekly reversal” to the downside last week mandates that we take material action to reduce our exposure to gold and we will do exactly that.

The information, statements, views, and opinions included in this publication are based on sources (both internal and external sources) considered to be reliable, but no representation or warranty, express or implied, is made as to their 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.

The AlphaBaskets blog provides frequent market insight and commentary by AdvisorShares Investments, LLC, created by AdvisorShares and other leading active managers.  AdvisorShares Investments is an SEC-registered investment adviser and the investment adviser to the AdvisorShares actively managed ETFs. The views expressed on AlphaBaskets should not be taken as investment advice or a recommendation for any of the actively managed ETFs advised by AdvisorShares.