From today's Gartman Letter...... (1-7)

"COMMODITY PRICES HAVE BEEN QUITE STRONG in the course of the past twenty four or forth eight hours, but they are going to be under a bit of pressure today as share prices are weaker and as the Chinese monetary authorities have moved to tighten policy as noted just above. This decision shall take a bit of the “bloom” off the commodity markets this morning, for it has been supposed… or hoped-for… Chinese buying that has bid up commodity prices generally since late last year and as this new year has kicked off. Any dampening effect upon supposed/hoped-for Chinese buying then shall have an equally dampening effect upon prices…. and they already are.

Concerning gold then firstly, the logic of the problematic nature of the EUR as a reservable currency discussed at length above brings us even more solidly to the notion of owning gold not in US dollar terms but in terms of the EUR, of Sterling and now of the Yen too… especially in light of the comments from Mr. Kan, the newly appointed Finance Minister in Japan. Gold is now being seen by more and move governments as a 2nd or 3rd reservable “currency,” and with the European Union’s framework now being whittled away at, we can make the case that money that might have made its way into the EUR shall at the margins make its way into gold instead.

As we write, gold is trading £710, €788 and ¥105,085 and these are all sharply above the levels prevailing yesterday when we last marked prices to market. More importantly, these are prices that have taken out what had been previous levels of resistance, making even our worst purchases now nicely profitable. For the moment, we shall sit tight, enjoying the fact that the gold/foreign currency trade is our largest position and that profits are accruing. We’ll not add more to those trades for were really quite heavily involved already and we’ve little room to add to the positions; however, we will note that those not involved should become so, buying gold while selling equal dollar amounts of EURs, Sterling and Yen in order to effect the trade. Finally, this is fun again."