You are here: Home » Markets » Gartman: Gold is Good but Euro is Doomed

Gartman: Gold is Good but Euro is Doomed

Dennis Gartman made some gold-bullish but euro-bearish comments on Bloomberg on Friday. He sees the play in gold as less about fear and more about reserves, specifically the euro. He says that central banks in China or Indonesia are going to be sellers of euros reserves and buyers of gold reserves at the margin. While he didn’t give a price target for gold, he did say he sees it a lot higher than its current level around $1250, an all-time high. On the euro, he went so far as to say that the Euro was a `Completely Doomed’ currency.

(video embedded below)

While the U.S. dollar has been strong of late, we should not forget it was at $1.50 to the euro just months ago. I see the dollar as fundamentally weak given the Fed’s ability and willingness to print money.

So what has happened since then? With the euro crisis and European credit easing, people have awoken to the fact that the euro is also a fiat currency and that the Europeans may be willing to depreciate the value of their currency as well. As I see it, the rise in gold’s value has a lot to do with paper currency revulsion (something that may eventually hit gold ETFs down the line I might add).

A piece I ran last summer Soros: ‘the dollar is a very weak currency except all the others’ encapsulates my thinking on the issue.

By the way, Gartman makes some fairly aggressive comments at the end about a non-existent north-south divide in fiscal affairs. I should point out that the canard that the Northern Europeans are so much more fiscally responsible than the Southern Europeans is absolute rubbish. Look at Germany’s deficits over the past decade and look at Spain’s (Spain is the perfect example of a country that never should have joined the euro zone).

About Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

• View all posts by Edward Harrison →
• Blog
• Twitter
• Facebook
• Google+

• BBH CurrencyView: Euro Recovers, Good Selling Opportunity 18 May 2010
• A strong dollar, euro downside and a gold liquidation panic 22 Jan 2010
• Bob Janjuah: In an era of the destruction of fiat money: Euro to parity, Gold to $1500 12 May 2010
• The ECB is making good on Wellink’s statements 4 Sep 2008
• Jobs Data Determines Whether it is A Good Friday 2 Apr 2010