Dennis Gartman is among the most respected market strategists and has been publishing his daily commentary, The Gartman Letter, since 1987. He regularly offers his insight through presentations and courses for brokerage firms, central banks and U.S. government entities. Gartman is also a regular contributor to and guest on major financial television and radio networks, including CNBC and the Wall Street Journal.
Gartman recently sat down with ETF.com to discuss the rationale behind his new suite of gold ETFs, and explains why investors may want to consider foreign-currency-denominated gold investments. He also offers insight into the recent rise of agricultural commodities, and notes the commodities he wants to own right now.
ETF.com: AdvisorShares recently launched the Gartman gold/yen, gold/euro and gold/sterling ETFs. What's the investment thesis behind these new ETFs?
Dennis Gartman: The thesis is that gold is really nothing more than another currency. If you're Japanese, you have exposure, when oil prices change, not just to the price of oil but to the price of yen versus the dollar, because we price those things in dollar terms. Or if you're a wheat buyer in Europe, you have not an exposure just to the price of wheat on the Chicago Board of Trade or on the French wheat exchange, but you have exposure to the relationship between the dollar and the euro.
The same goes with gold. In fact, I think it's even more specific than it is with the other commodities, because I do perceive—and I think others are beginning to perceive—gold as being a currency.
In the foreign exchange market, people are trained to be a cross-trader. You trade Canada against euro; you trade euro against yen; you trade yen against sterling. Now we are giving somebody a very efficient and one-ticket methodology for trading gold against the euro; gold against yen; gold against sterling; or, in the case of GLDE, gold against those three currencies and the U.S. dollar.
I think that's important to understand. If you had just owned gold in dollar terms from the most inopportune time—beginning a year and a half ago—you're down 32 or 33 percent. If you owned gold in yen terms, because of yen's weakness relative to the dollar, you're down a scant 3 percent. Now, as I like to say, I think losing 3 percent is much better than losing 35 percent.
ETF.com: Of the three, is there one in particular that you favor more than the others?
Gartman: Over the course of the past several years, I've much preferred owning gold in yen terms, but this is an interesting day to ask the question, because I think with Mr. Draghi's comments this morning [May 8, 2014], and with the statements made last week by the new prime minister of France, Mr. Valls, indicating that the euro was extremely overextended, I may start to be more interested in owning gold in euro terms, because I think the euro is about to start to weaken rather materially.
So heretofore it's been far more impressive, and far more interesting, and far more beneficial to be long on gold in terms of yen. But I think henceforth, although I'm going to continue to sit tight owning gold and yen, I think gold in euros is the more interesting trade.