Dennis Gartman Discusses Commodity-Linked Currencies, China's 'Vehemently Pro-Capitalism' Policies

Dennis Gartman publishes a daily publication called "The Gartman Letter" where he offers his latest opinion and analysis.

On Wednesday, the investment pro discussed why it should be concerning that commodity-linked currencies are rising.

At the time of publication, the Canadian dollar, among other commodity-linked currencies were trading higher. He noted that this is "more than merely of modest passing interest;" rather, it is "of very real, and very important interest," as these currencies gain in value while the euro and yen turn "importantly for the worse."

Gartman continued that these commodity-linked countries "have been declared dead and/or dying," but have now "turned markedly for the better."

"We sense a major turning point is developing in the capital markets and in the forex markets that shall...or should...mark the next several months as we err upon the side of buying the 'commodity producing currencies' and err upon the side of selling the 'commodity consuming' currencies," Gartman stated in his letter.

Related Link: Investors Look To China For Bargain Buys

"That is, we shall be a buyer of the 'dollars' collectively, as well as the Mexican peso, the Russian ruble and perhaps even the Brazilian real (although the political situation in Brasilia shall likely keep us on that currency's sideline) while we are sellers of the EUR (euro), the yen, the renminbi et al."

China's New ‘Vehemently Pro-Capitalism' Policies

Gartman discussed China's "very material news" that accounted for a "violent shift" higher in Chinese equity prices on Tuesday. Specifically, the government announced an abolition of taxes to be paid on dividend income on stocks held for more than a year, while the tax rate on dividends on stocks held for at least one month (but less than one year) was slashed in half.

"This is as vehemently pro-capitalism as any policy we've seen in many, many years and Beijing is to be applauded for this decision," Gartman argued. "Other countries shall have to follow. They shall have no choice really."

The "explosion" in Chinese equities carried over to equity markets in Hong Kong, Shanghai, Sydney, Taipei, Kuala Lumpur, Singapore and then on to U.S. equities.