From BARRONS - Dennis Gartman bullish on Gold/Silver and commodities/currencies:
Q: Fine. In the world you describe, what should people be owning, apart from European equities?
A: For 20 years, I would end every speech by saying that gold is a worthless, barbaric metal, whose price would continue to decline. So it was very strange for me to write a note, a month and a half ago, saying that I'm not bearish on gold any longer. It was simply that other commodity prices went through sustained increases. It wasn't a mere one-off for crude oil or copper or aluminum or grain.
Q: And now, coffee.
A: Even the softs, which should be the ones, if you look at Latin America, that would have continued supply coming in, have moved violently higher. A very important circumstance occurred when gold didn't fall on the day the Bank of England sold its second tranche of gold. One of the first rules of trading is, when something doesn't go down on bearish news, you probably shouldn't be bearish anymore. Doesn't mean you have to run out and buy it. But you ought to stop being short. Now, here we are after an enormous spike in gold prices, caused by the European Central Bank's decision to limit gold sales. Several weeks later, gold still hasn't retraced. Attention must be paid. Here is what I think is happening. I believe that at its recent meeting, the G-7 arrived at a decision to allow monetary aggregates to ramp up at the fastest pace, probably as some aid to Japan. I think the ECB agreed, and in the interim decided to stop selling gold. This tells us that gold prices probably are still going higher. Before it is finished, there's a very reasonable possibility that gold will get very close to $400 per ounce.
Q: Where else?
A: My time horizon is from six months to a year and a half. My campaign in the Japanese yen lasted three years. Starting last year, I began to tell people that the age of owning paper is behind us. The age of owning stuff lies ahead. I mean commodities, gold and silver, the producers of stuff. I want to be long currencies of producers of goods and commodities, and short the currencies of consumers. I'd be long the Australian dollar, the South African rand, the New Zealand dollar, the Canadian dollar, short the yen. My propensity to add to my holdings of Japanese shares is less than it was; to own Canadian, New Zealand, Australian shares is greater. I am looking for relatively pure silver plays like Pan American Silver and Apex Silver Mines, with silver in relatively tight supply. We spoke earlier about political developments. The world always misunderstands the provincial and separatist politics of Canada. Too many people remember the separatist movement of two years ago and believe it will come back on the front burner very quickly. That isn't true at all. The leader of the Parti Quebecois has said that until he is convinced that a separatist motion will pass readily, he doesn't want to bring a referendum. And the polls suggest that that is simply not going to happen-support for separation is waning quickly. So too many people are factoring in a risk in Canada of separation. They are undervaluing Canadian assets as a result. Finally, we're in a bear market in debt and we probably have the same phenomenon in the U.S. stock market. Rallies are to be sold, rather than weakness to be bought. |
