From today's Gartman Letter...... (1-5)

"COMMODITY PRICES ARE QUITE STRONG as the dollar weakens, with the precious and base metals leading the way higher. As we write, spot gold is trading $1126 and €778, and we are impressed by both figures. We should be, for in the case of gold predicated in EURs, this is most impressive, for support at or near €755-€760 has clearly held firm.

We had a chart in yesterday’s TGL of gold in EUR terms that showed just how strong and just how well maintained was that support for gold. Over the course of the past four weeks that support has held intra-day time and time and time again. Over the course of the past four weeks, that chart in hourly terms showed that gold was forging a nicely defined “triangle” but that it would take a move upward through €780 to break out to the upside. That may come today, either if gold in dollar terms moves higher or the EUR moves lower, or perhaps both.

This brings us then to gold in British Pounds Sterling terms, which is £700 as we write. Using the same 8 hour time period that we used for Gold/EUR, it is clear that support at or near £675-£680 has proven more than merely formidable; it has proven to be what the Maginot Line was hoped to have been; impenetrable as evidenced by the chart this page. Further, gold in Sterling terms has broken out to the upside through the same “triangle” formation noted above in gold/EUR terms, suggesting that it is only a matter of time until new highs prevail above £735.

Finally, regarding gold in non-US$ terms, as we write gold is trading ¥103,500; it was only last week that gold in Yen terms was below… but only just barely… the psychologically important Yen 100,000 level. Now it is nicely and safely above it as the world seems suddenly to be clamoring for gold.

The fundamental gold news is led this week by news out of India where gold imports in December were materially… indeed very materially… higher. In December, according to the data supplied by the Gold In Sterling Terms Bombay Bullion Association, India imported on the order of 33.5 tonnes of gold up from only 3 tonnes a year ago. However, before one leaps boldly into the bullish camp we should note that despite this inordinately sharp increase in December ’09 vs. the same month a year ago, for the entire year gold imports were, according again to the BBA, "a little over 200 tonnes" compared to 420 tonnes in ’08. Thus, December’s rather sharp rise was merely the market’s attempt to return to the mean, as markets always do.

This leaves us to wonder, however, that if gold can rise as smartly as it did last year with total Indian gold imports having fallen by half, what shall happen if Indian gold imports simply hold steady in ’10 compared to ’08? What if Indian buyers become comfortable with this new high price for gold, accept it, and then begin buying anew as they have historically? What if, indeed?"