Gartman: EU Debt Plan to Hurt Currencies - Buy Gold in USD, GBP and EUR as “Is a Currency”

25 October 2011 GoldCore


Gold is trading at USD 1,662.10, EUR 1,191.70, GBP 1,038.50, JPY 126,592.0, AUD 1585 and CNY 10,572/oz.

Gold’s London AM fix this morning was USD 1,656.25, GBP 1,036.19 and EUR 1,187.96 per ounce. 

Yesterday’s AM fix was USD 1,651.00, GBP 1,035.56 and EUR 1,191.37 per ounce.


Cross Currency Table 

Gold has edged higher in all major currencies again today as concerns about the European debt crisis and the risk of contagion is leading to demand for gold for wealth preservation purposes.

The likelihood of the Eurozone sorting out their intractable problems has come into question again as bankers in Europe’s largest banks have clashed with politicians about the size of losses they will have to take on their Greek debt.

Another bullish factor is more dovish sounds from the Federal Reserve regarding driving down mortgage rates to support the housing sector and another round of quantitative easing which was suggested by William Dudley, president of the New York Federal Reserve Bank.


Gold in USD – 30 Days (Tick)

Physical demand out of Asia remains robust as seen in healthy premiums with gold premiums in Vietnam gold at a $28.07 premium over world gold of $1,642.65 and Shanghai gold closed at a premium of $12.89 to world gold of $1,652.25 (see LeMetropolecafe.com for Asian premiums). 

Diwali is tomorrow and Indian demand has fallen somewhat but remains robust despite very significant demand in recent days and weeks.

Newsletter writer Dennis Gartman has done a swift about turn and is now adding to his gold position by buying the metal priced in dollars, pounds and euros, he wrote today in his daily Gartman Letter.

Only last Tuesday, Gartman wrote that the gold market is suffering "very real damage." His comments were picked up very widely making headlines in the financial media internationally. Gartman warned that he feared that the rally from September's lows is "now under assault."

Today, Gartman said in his newsletter that he was certain gold prices would break upwards sooner rather than later. 

Gartman said that the EU debt plan would hurt currencies. Therefore, gold will rally as currencies fall.

"The authorities have no choice but to inflate their way out of the morass that they’ve found themselves falling into and that shall mean the diminution of currencies generally and the advancement of gold as the only currency not diminished", he said.


Gold in EUR – 30 Days (Tick)

"Gold is a currency; it has been for years and it shall be for years going forward. A move upward through EUR 1,200 for gold today or tomorrow or this week or next shall be impressive and important," he said in the newsletter.

Gartman’s about turn may be important as he has been good in recent years in being long when gold has been rising in price despite a number of incorrect bearish calls at key junctures. Also, he is followed by major banks, hedge funds and institutions who trade in gold on Wall Street and may influence their trading activities. 

The swift about turn is indicative of the near impossibility of trading these markets in the short term. It is evidence that even the most experienced and respected of Wall Street analysts can make incorrect calls which can cost people money.

This is why we encourage ordinary investors and savers to adopt a widows and orphans approach to investing in these uncertain times by buying quality assets with real diversification and adopting a buy and hold approach.

Timing markets is only for professionals and even they often get it wrong.

We make a market in buying and selling bullion and it is not in our interest, from a short term profit point of view, to discourage trading and ‘churn’ as this leads to commissions.


Gold in GBP – 30 Days (Tick)

However, we take our fiduciary duty seriously and believe we will have relationships with clients and their families and friends for life if we look after their interests. We do this through protecting their wealth by adopting a ‘buy and hold’ approach with regard to their bullion holdings. 

It is advisable to ignore the noise of traders, hedge funds, commodity brokers and more speculative elements. In these uncertain times, it remains crucially important to focus on the importance of gold as a portfolio diversifier and a safe haven asset. 

For the latest news and commentary on financial markets and gold please follow us on Twitter. 

SILVER 
Silver is trading at $31.77/oz, €22.82/oz and £19.86/oz 

PLATINUM GROUP METALS 
Platinum is trading at $1,547.50/oz, palladium at $637/oz and rhodium at $1,525/oz. 

NEWS
(Business Week via Bloomberg) 
Gold Advances for a Third Day as Europe’s Debt Woes Spur Demand

(Reuters) 
Gold steady before EU summit; physicals resilient

(Bloomberg) 
Gold May Extend Rally to Record $2,200 Per Ounce, AngloGold Ashanti Says

(Reuters) 
AngloGold CEO sees no bubble in gold price

(Bloomberg) 
SPDR Gold Trust Holdings Increase 6.05 Metric Tons

COMMENTARY
(MarketWatch) 
Gold Manipulation Thesis Goes Mainstream

(King World News) 
James Turk Report - Why Gold Will Go Above $11,000

(Goldseek) 
Where in the World is the Gold?

(Max Keiser) 
Jim Rickards: Don’t keep your gold in bank vaults

(Gold-Eagle) 
What Chinese Unemployment?

(MoneyWeek) 
Bill Bonner: The Burdens of Empire