From today's Gartman Letter...... (12-16)

"Regarding gold, we remain… and indeed are all the more… bullish of gold, but we are bullish of it in EUR and Sterling and Yen terms. We are this morning going to recommend strongly that all current gold in US$ terms be “swapped” into Gold in Yen terms, leaving us long only of gold in non-US dollar terms from this point forward. That having been said, the question is why and the answer is that we can readily imagine a scenario where the dollar strengthens… perhaps even materially…. and gold rallies as the problems in the EU become more and more severe, rending the Union at the periphery and causing those who might otherwise have moved reserve assets out of US dollars into EURs to instead move dollar assets into gold, and who might actually begin to unwind EUR reserve asset positions, moving those reserves into gold also.

Where we at the helm of the Peoples Bank of China, knowing the we would be quietly, but consistently, moving reserves away from the EUR and toward gold given the very public problems that Spain, Greece, Italy and even Ireland are having at this time. Simply put, why would we move reserve assets to Europe when we see this sort of confusion, knowing that if Greece, Spain, Ireland and Italy are having these problems then so too must the other smaller countries of the EU, and if that is true, then how safe are my EUR denominated assets and why would we wish to add to them? It is a reasonable question to be asked, for as we’ve said many, many times in the past several decades, confusion breeds contempt; that is, confusion suspends purchases of anything and in this instance confusion regarding the existence of the EU itself shall suspend purchases of EURs and will increase, on balance, the propensity to own gold.

To that end we note that gold in EUR terms is performing a great good deal better than is gold in US$ terms. In the very short term, Gold/EUR has found strong support at or near €758-€762 since mid-week last week and has begun quietly to turn higher. As we write, gold is trading €775, and this we find rather impressive. Note then the chart of gold in € terms in eight hour periods at the upper left of p.1. Support at €760 was formidable indeed and has held. The chart of Gold in Sterling terms, or even of gold in Yen terms looks not-that-surprisingly similar to that of gold in EUR terms. Hence we sit tight, believing more and more that the correction has run its course; that the late longs have been taken out of their positions and that the path is clearer now for high prices across the board.

Finally, our old friend, John Brimelow… who keeps us apprised of these things… notes that MarketVane’s Bullish Consensus for gold lost a point to 78% and we note that it was only a week or so ago that this had gotten as high as 89%. In other words, a week’s worth of weakness has done what it is supposed to do: it has cleared the air rather materially. At the same time, GLD’s holdings have held quite steady at 1,116.5546 tonnes. This we find impressive."