The Fed’s nondecision… or as one insightful analyst referred to it, the Fed “pulled a Lucy,” reminding us of the fact that in the great US comic strip Peanuts each autumn Lucy cons Charlie Brown into believing that this year she will hold the ball steady so he can kick the field goal he has longed to kick year after year after year only to have her jerk it away once again at the very last minute to see Charlie go flying through the air fueled by his kick and to land hard upon his back on the ground having fallen for the con once again, for the Fed seemed to have promised this time to have raised rates only to have jerked that promise back at the last minute leaving Wall Street and Main Street flat upon their back once again; a perfect… or near perfect metaphor… has been digested and the end result is that the markets now understand that the Europeans and the Japanese have actually been given the “go-ahead” by the Fed to become more aggressively easier than they might otherwise have been.

We made the statement last week that “in the end, the Bank of Japan and the ECB shall have to trump the Fed’s easier policies with even easier policies of their own. In the end the dollar’s longer term bullish trend shall prevail…”: We stand by the statement but we shall have to admit that we never really expected the market to embrace that same notion as quickly as it did. We fully expected the dollar to remain under some strain for a day or two or three perhaps and that we would have the time to become short again of the EUR, having been stopped out of our short position following the Fed’s “nondecision” last Thursday.

Regarding gold we were impressed by gold’s ability to hold very firmly last Friday when historically Friday’s have been gold’s nemesis. Right now gold is trading just below $1140/oz. and there were some rather formidable sellers at that level last Friday.  It shall be interesting to see what happens when that formidable seller is removed from the market.

Dennis Gartman has been directly involved in the capital markets since 1974 and has been publishing his daily commentary, The Gartman Letter, since 1987. Mr. Gartman is a strategic partner with the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN) and lends his institutional insight to educate advisors and investors about trading gold in different currency terms.


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