From today's Gartman Letter...... (9-8)
"COMMODITY PRICES, GENERALLY, ARE TRENDING LOWER this morning, with the exception that gold and silver are again quite strong, and that gold and silver are stronger in terms of sterling and EURs than they are in terms of US dollars. This we find interesting as it vindicates our decision to own gold predicated in terms of sterling and EURs rather than in terms of US dollars. As we write, gold has just pushed upward through $1000/oz and is and shall be the topic de jour.
Moving on to gold, firstly of course we note that $1000 has been taken out in a rush, and given that the dollar is still strong… or at least stable…relative to the EUR and the British pound Sterling, this is a rush out of currencies generally rather than a rush out of US dollars parochially. We’ve spoken sufficiently regarding our reasoning specific to gold prices in non-US dollar terms, so we see no reason to go into it here again this morning other than to note that by owning gold predicated in Sterling or EUR terms one is hedged against the weakness in gold that might otherwise cause us some surprise when the dollar strengthens intra-and-inter day.
Governments everywhere are going to have a difficult time explaining gold s strength today. Not only shall Washington be nonplussed regarding gold’s movement upward through $1000, but so too shall Downing Street have difficulties explaining how it is that gold is trading upward through £600 so readily, as it trades £611 as we write. And if Downing Street has problems, what then of Ms. Merkel’s government in Germany or Mr. Sarkozy’s in Paris as gold trades upward toward €700, trading €699 as we write? How then shall they explain this even more serious strength in gold? Likely they shall have none."
