Barron’s: Gartman On Gold – Venezuela’s A Seller

Gold BarsThe potential pressure on gold prices is reflected in what Venezuela has been doing. Oil is the country’s main export, and the United States imports some of it. (See our post on President Donald J. Trump plans to construct controversial energy pipelines.)  Caracas Capital emailed us Dennis Gartman’s subscription newsletter published Friday with comments on Venezuela’s sale of gold as it struggles to produce oil revenue and make bond payments.  Here’s the Gartman excerpt:

” … courtesy of our friend Mr. Russ Dallen of Caracas Capital … Venezuela sold $2.85 billion of gold last year, all of which was in the first 6 months of the year. According to the Venezuela Central Bank as of the end of November, Venezuela had $7.7 billion in gold remaining. Last year’s gold sales were not Venezuela’s first for we note that the Reserve Bank sold $4.58 billion worth of gold in 2015. It will sell more this year; it has no choice. Gold may be its only source of liquidity. Further, regarding gold, another friend in the industry, Mr. John Brimelow, informs us that the open interest in gold on the COMEX fell 4.3% Wednesday. This is not an unprecedented decline in the open interest, but certainly it is more than merely noteworthy. Finally, we remain of the mindset that the only rational way to be long of gold is via euros (EURs) and or via Yen, for the dollar remains strong and we ask again, “Why would one use rising dollars to buy gold when one can use falling EURS and Yen to do the same job? … ”

http://www.barrons.com/emergingmarketsdaily/2017/01/27/gartman-on-gold-venezuelas-a-seller/

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