Monday, April 21, 2008

Gartman abandons ship on higher gold price

After three years of a positive outlook for gold Dennis Gartman wrote in his Gartman Letter today:

"The relative strength of the market has been waning since early this year, a circumstance that has bothered us but which we were willing to overlook so long as new highs were being made. It has bounced today, and we shall sell that bounce and exit, entirely.''

Jim Sinclair is not of that wavering sort. He confirms his wager of USD$1,000,000 that gold will hit $1650 on or before the end of the second week in 2011. He believes that the action of the US dollar against the euro will be the "final voice" that determines where the price of gold is going. "There has never been any other driver of gold and there will never be other than the US dollar as the final common denominator." He thinks that 1 euro will eventually be worth 2 dollar. "Right now, right here, the euro is in charge."

Central banks have increased liquidity to stave off tightening conditions in the current credit crisis. M3 money supply is up 20% year over year in the US and global supply has also increased significantly. For Jim Sinclair this can only mean one thing:

"The implication of this is that price inflation follows monetary inflation and therefore we have not even come near the highs that will be posted by hard assets and asset based situations."

click to enlarge

We might eventually be heading this way at least according to Sinclair:

source: Dennis Gartman 'Abandoning Ship' on Higher Gold Price

Where We Stand In The Price Of Gold
Jim Sinclair's MineSet,1&AR_T=1&GID=&linkid=6028&T_ARID=6083

read also: Jim Sinclair thinks "This is it"

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