Sunday, March 21, 2010

Gartman on Gold, the Dollar and Stocks

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Dennis Gartman talks about the relationship between the U.S. dollar and gold.
Well, theoretically there is some correlation between the U.S. dollar and gold. Characteristically, as the U.S. dollar weakens, gold tends to get stronger, but I'm not sure at this point that you can hang on to that thesis and [trade with it] as you might have a year or two years ago. We've seen gold go up even on days when the dollar is strong, which drives some people crazy and confuses them. I think gold is simply becoming the second reservable asset replacing the euro, which people thought was going to be the next reservable asset. The dollar remains the most important reservable asset for central banks around the world. Gold is now probably the second most..... gold in sterling terms, gold in euro terms, gold in yen terms, gold in Swiss franc terms keeps making new highs. I'm not smart enough -- and maybe when I trade another 10-15 years I'll be smart enough -- to be able to make a better answer to you. But the only answer that I can understand is that anyone who is short of gold in foreign currency terms is losing a lot of money. Anybody who is long of gold in foreign currency terms is, on balance, making a lot of money.
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