From today's Gartman Letter...... (9-30)

"Turning then to gold, and sounding like the most broken of records, we remain bullish in terms of other currencies and we are happy to have hedged-out the dollar risk incumbent in gold prices over the course of the past several weeks. There shall come a time… sooner rather than later… that we will be bullish of gold in US dollar terms also, but for now we remain bullish of gold in terms of Sterling first and EURs secondarily.

As we write, gold in Sterling terms is trading at or very near to £620. There is resistance... and it has been rather strong resistance… between £624 - £629, and so it shall take a movement upward through £630 to entice us to add to the trade. However, when it does… and we do believe it shall be but a matter of time until it does… we will add to the trade rather readily.

To that end, we’ve had a large number of questions as to how one structures gold in Sterling. It is really quite simple: one way…. and perhaps the easiest way… is to own the gold ETF, GLD, and to be short of the British pound sterling ETF, FXB, in equal dollar amounts. That is, one might buy $100K of the GLD and sell short $100K of the FXB, so long as one is able to “borrow” the FXB and can get short of it. Or one might buy the gold ETF and sell short a correlative amount of the British pound sterling either on the IMM or in the spot market. Or one might buy the gold futures and sell short the IMM British pound sterling futures… or one might wish to be long a “beta” adjusted gold equity such as ASA Ltd., or Barrick, or Newmont, or Agnico-Eagle, as one prefers, while shorting Sterling in any of these suggested forms. The point here is that one hedges away one’s inherent US dollar exposure in this manner.

As noted, eventually, we shall return to owning gold in US dollar terms also, and when we do we’ll not be abandoning the long gold/short Sterling or EUR positions, but we’ll simply be diversifying our exposure to gold. Until then, however, ‘tis gold in Sterling terms as our preferred exposure to gold itself. Thus far, it has worked."