Keene: And that thermometer, folks, is heating up here in the last couple weeks. We were at a 130-ish and we have come in very strong Yen. The drama yesterday a.m. as Ken had his First Word on of a print of a 108 Yen per Euro was really remarkable. Granted, we've come back a little bit, a little bit stronger Euro in the last say 30 hours, 1.1128 right now. But, Ken, really that thermometer that Dennis talks about was really heating up yesterday and a little reprieve this morning, but still boy, have we moved far. We got to come back and talk to Dennis about gold, particularly gold based in British pound sterling.
07:24
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07:37
Keene: Dennis Gartman with us from the Gartman Letter. Here's the score, folks, since the beginning of the crisis call it August '07, gold in dollars up 82 percent, not bad. Gold in Euro's up 95 percent and gold if you bought it in sterling, long gold, short sterling up, 152 percent. Dennis Gartman nailing this trade. Dennis, you just covered your trade and then you jumped right back in. Tell us about that.
Gartman: Well, I've been very fortunate understanding that gold is not being driven higher in the last two years by inflation because if it were than bond prices would be lower, not higher. Gold is being driven upward because of weakness in the Euro, problems in Europe and gold becoming again a reservable asset. I'm not a gold bug. I don't like the gold bugs. I'm not a buyer of gold thinking the world's coming to an end. I have been a buyer of gold because it's the second-most important reservable asset and it's been easier for me to own gold in foreign currency terms because primarily we think of gold as being driven by an anti-dollar circumstance.
Keene: Right.
Gartman: This way owning gold and being short of the foreign currencies you hedge out that dollar risk and it's turned out to be -
Keene: Yes.
Gartman: demonstrably better trade.
Keene: The chart separation between sterling and Euro on gold, really hearkens to what Ken and I have heard from so many people, focuses on Europe and a lot of people; Lena Komileva among them, suggested wait a minute, focus on the United Kingdom. Do you agree with that?
Gartman: I'm not sure that I agree with it. I'm not sure that I terribly disagree with it either. I think simply that England has at least as many problems as does the continent and quite honestly, I'm not wise enough to have said, I'd prefer owning gold in sterling terms over gold in Euro terms. I preferred owning them in both terms. That's wise enough. I'll let people who are wiser than I or sillier than I try to differentiate between the two. It's been good enough to own gold in European terms. That's served quite well.
Prewitt: Well, as you say, Dennis, you're not a gold bug -
Gartman: No.
Prewitt: A lot of people are.
Gartman: It's astonishing how many gold bugs there are out there. And what I find interesting is that if you're bullish of the gold market, if you're not bullish of it for the proper reasons, the gold bugs really don't like you. The gold bugs want to be bullish of gold because they think the world's coming to an end because they think inflation is going to be ravaging everything. I just am not of that group. And so even when I'm bullish of that market, they take me to task.
Prewitt: We have the Organization for Economic Cooperation Development forecasting 2.7 percent growth for the 30 member nations, up from - up quite a bit from 1.9 percent they were predicting in November, and that assumes China will continue to lead the way. Are they right about that?
Gartman: Well, I find it amusing that we pay much attention to whether a global growth is going to be 0.5 percent one way or the other. I'm not sure that anybody is capable of ascertaining whether that's true or not. I think what is important is China probably will continue to be the motive driving force. Let's hope they shall be. You have an enormous population leaping from the 17th Century directly feet first into the 21st Century and I think that that gives rise to many, many more years long into the future of sustained growth in China. Can China grow from - can China go from 17 percent GDP to 6 percent? Sure, that's reasonably - that's very, very possible. But is China going to go into what we would consider to be a recession any time soon? I think not.
