From today's Gartman Letter...... (9-21)

"COMMODITY PRICES ARE UNDER PRESSURE as the dollar strengthens, and all things being equal, that is as it should be. Gold has fallen back below the psychologically important $1000/oz level, but at the same time, gold in Sterling terms is steady, trading £618.30 as we write compared to £618.90 on Friday when we last marked it to the market. Those who scoffed at us when we strongly urged owning gold either in Sterling terms or in terms of the EUR now see the wisdom of our method, for in so doing we’ve hedged out the dollar risk to the trade and have gained exposure then to gold in rather “purer” terms. If nothing else, owning gold in Sterling or EUR terms allows us to weather the inevitable storms that race through the gold market from time to time.

If we must pass bearish judgment upon the gold market this morning for reasons other than the strength of the US dollar, let’s give credence to the decision by the IMF late Friday to sell a sizeable sum of gold from its hoard in order to increase its lending abilities to its client states. The announcement was made over the weekend, with the Fund announcing its intention to sell 13 million ounces of gold, and if we are doing our math correctly that is just a bit more than 400 tonnes of gold. The Fund has said that it will hold to the Washington Agreement’s allowance for the sale of 500 tonnes of gold this year.

This is not new news; indeed this is old news that has been hashed and re-hashed time and time again in the gold market. The only real question is how shall the gold be sold… by quiet but steady sales into the open market, or by a one-off sale from the IMF to the Chinese, or to the Russians, or to a consortium of gold buyers who wish to roll down their holdings of US Treasury securities and instead wish to roll up their holdings of gold. If the former, then perhaps the lingering effect will be quietly bearish of gold in US dollar terms; if the latter, then the effect will be short term and will eventually be positive for gold…in all terms."