From today's Gartman Letter..... (7-27)

"COMMODITY PRICES ARE HIGHER AND RISING, as the US dollar is lower and falling, and that is as it should be. Firstly, as we write, spot gold is trading upward through $955 and appears to be breaking out to the upside, cutting through the resistance that has been extant for the past several weeks and forcing us to add to our long positions in gold in the process.

Note then the chart at the bottom left of p.1 of gold prices in EURs. Good bull markets in gold are priced in US dollars, but great bull markets in gold are prices in dollars, and EURs and Yen and Rubles and Renminbi, et al. We are buyers of gold today in US dollar terms, but we shall become even more enthusiastic about gold should Gold in EUR terms trade upward through €675 and then eventually through €700. As we write, and as gold in US$ terms is trading $957, gold in EUR terms is trading €671. Our interest is piqued; so too should that be of our readers around the world [Ed. Note: There was a bit of confusion last week when gold traded to and through $955 for a few moments as to whether we had added to our position again, and we had note, for we had said that we’d not do so until such time as gold traded through that level for at least a full hour, allowing it time to prove its merit. We used the Reuters for our quotes on gold, and by our quote screen, gold did not trade through that level for the required period of time. Other quote systems, however, had spot gold trading upward through $955 for 60-65 minutes, while others had gold trading upward through that price for a half hour or so, then falling back then moving back above that price zone, then falling back yet again, never holding there for the full hour. Such are the quirks of dealing in spot gold. A few commentators, with little else to do, accused us of “lying” regarding our stop point, as gold then fall back to $946. We say that in the great scheme of things we hope that $6-$8/oz does not constitute materiality, and we wonder if these people have anything else to do other than find fault with others.].If gold does hold for the next few hours above $955, and if €675 is taken out, we can imagine a rush upward toward the real resistance that exists between $985-$1000, for there the real battle will begin in earnest.

What really has our interest this morning, however, is that aluminium and copper prices are on a tear higher, with aluminium trading “limit up” of 5% in Shanghai earlier today. Aluminium did not finish at the limit up, but certainly it was strong, ending the day more than 4% higher. Copper too was strong, rising another 1-2%, and it is interesting to note that these base metals rose sharply even as inventories are high and rising also. Indeed, aluminium inventories at the LME are at record high levels, to the consternation of those who are bearish of the base metals and are and have been short predicated upon high inventory levels. High inventories are bearish when prices are falling; when prices are rising, they matter not at all. This is a lesson that is hard to learn and which we have had to learn the hardest of ways… by losing money."