Oil touched a record $80 a barrel and the dollar sunk to a record low versus the euro Wednesday. Also, wheat hit a record and gold continued to hold well above $700. How do you trade these currency and commodity milestones?
Strategic investor Dennis Gartman, author of The Gartman Letter, joins the panel for this conversation. Here are excerpts from what was said.
Why did oil jump over 80?
“The demand for oil is continuing to push oil prices up,” says Gartman. OPEC raised production but didn’t raise it all that much..."
He adds, “Demand is strong not just in the United States but everywhere…quite frankly I’m not sure where it will stop … the trend is up.”
Are you more inclined to buy oil now?
“I am long crude oil,” says Gartman. “(I do that by being) long Athabasca (ABM) and Suncor (SU)… and I see every reason to be that way.”
He adds “I’m not more excited to see crude above $80 – that’s more psychological… actually (the price) frightens me a bit because the public tends to want to buy things when you go onto the new number. But the trend is up.”
Is the imploding dollar the driver?
“Well the dollar’s weakness continues and the market is saying it knows The Fed is going to ease monetary policy,” says Gartman. “The question is, more than 25 basis points? I think not.”
He adds, “Many of the Persian Gulf states say straight forward that they want to price oil in other currencies. That they’re moving away from dollars.. and in an environment such as that, anytime you get a rally in the dollar you should probably be a seller.”
What about soft commodities and gold?
“Gold is the anti-dollar,” says Gartman. “As the dollar gets weaker, all things being equal, gold is going to get stronger.”
He adds “I’ve been bullish on gold for a long time.. gold is going up and anyone who’s been short is getting hurt.”
Am I late to the party to buy it now?
I wouldn’t pay $711 for spot gold right now.. but if you get a chance to buy spot gold under $700, then you can buy it,” says Gartman.
Where do we stand on soft commodities?
“Wheat has been the soft commodity of the year. Two years ago you were talking $3.50 a bushel. On Wednesday, it traded over $9 a bushel.”
He adds “(But) don’t be surprised if $9 a bushel soon becomes $7 a bushel.”
Jeff Macke tells the panel he thinks the trade is to buy shares of Sara Lee (SLE) and General Mills (GIS).
Dylan Ratigan reminds investors if they want to get long the yen the ETF is CurrencyShares Japanese Yen Trust (FXY),and for the euro it is CurrencyShares Euro Trust (FXE).
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Trader disclosure: On Sept. 12, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (HAS), Najarian Is Short (GS), Finerman's Firm Owns (DVA), (WMT), (COP), (JNJ); Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns Russell 2000 Puts; NBC Universal Is The Parent Company Of CNBC
Gartman's Fund Owns Crude Oil; Gartman's Fund Owns Gold Gartman Owns (SU);Gartman Owns Gold; Gartman's Fund Owns Wheat