From today's Gartman Letter...... (11-11)

"Gold is quite strong, moving upward through $1110 this morning and trading to $1115 as we write. Much is still being made of the 200 metric tons of gold sold by the IMF two weeks ago and taken up entirely by the Reserve Bank of India. We should remember that this was more gold sold at one time than was sold all of last year by what we refer to as the “legacy” central banks of Europe. We have long said that the central banks of Asia in particular were preparing to diversify their reserve holdings, and the decision by the RBI was the first such major shift into gold. India's purchase, directly from the International Monetary Fund, conducted between October 19th-30th, was the biggest single central bank purchase in three decades, lifting India to the world's ninth-largest government owner of gold. This cannot be dismissed lightly out of hand, for the RBI does not make decision lightly.

While on the topic of “central bank” gold transactions, we note, courtesy of our old friend Mr. John Brimelow, that the ECB’s weekly statement of condition indicates an E20Mm decline in “gold and gold receivables” which the Bank attributes to the “issue of commemorative gold coins by one Eurosystem central bank”. That’s 0.91 tonnes of gold and if this is not considered therefore to be a “conventional” sale of gold there have been no ECB group sales for a month. Under the current quota granted to the central banks and the IMF weekly average gold sales should be, or could be, 7.69 tonnes. Clearly the Banks have no urgency to sell gold into the current strength… or as some might argue, they are incapable of doing so.

We remain bullish of gold, but we are now bullish of it in a “smorgasbord” of various currencies: the US dollar; the EUR; the British Pound Sterling and the Yen, in order to hedge away as much as we can of the US dollar exposure incumbent in gold trading. In retrospect would we have done better by owning gold solely “against” the US dollar? Of course; but at the same time, we’ve been better able to weather the various intra and inter-day “storms” that plague the gold market because of our hedges, and for that we are grateful and content to hold our positions as they’ve been established and as they’ve prospered."