With the dollar continuing its rally and gold, silver, and oil trading lower, today one of the greats in the business sent King World News a fantastic piece with a Q&A about Larry Edelson’s call for a bottom in gold, silver and oil and what he called Mark Hulbert’s “nonsense.”
By Bill Fleckenstein President Of Fleckenstein Capital
November 17 (King World News) – Overnight markets followed yesterday’s rally here higher, with Europe gaining 2%. So it wasn’t just the U.S. that managed to soar in the wake of the terrorist attacks in Paris, though I really can’t give you a good explanation as to why…
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Bill Fleckenstein continues: In any case, through midday the indices gained about 0.5% as the S&P began to bump its head against the 200-day moving average. In the afternoon, the market backed off some and, with an hour to go, when I had to leave, it was about 0.3% lower!
Away from stocks, green paper was once again the flavor of the day, oil lost 1%, and fixed income was lower, as were the metals, with silver flat versus gold’s 1% loss. The miners were hit pretty hard, though most have not yet made new lows, even though gold has. We will learn soon whether that is meaningful or just noise.
The “Bawk-bawk-bawk” Stops Here
There really isn’t a lot of editorial comment I can add to the current stock market action, other than to note that the game of chicken between the S&P bulls and the Fed continues. I still believe the market is not going to be able to rally very far in the absence of QE.
On the other hand, I am mindful of the fact that no one has ever seen QE before. Thus, how long its fumes can continue to drive the market is anyone’s guess. So while I am eager to be short, I am also aware that the market could rally between now and the end of the year. And though I have a decent amount of short exposure, I am managing my risk very carefully.
Included below are four questions and answers from today’s Q&A with Bill Fleckenstein. The questions are from his subscribers and they get to read Fleckenstein’s answers every day.
Bonus Q&A
Question: Mark Hulbert, who oddly enough writes from my town Chapel Hill, NC, claims that gold investors have not thrown in the towel yet on gold and have not experienced true despair, and only when they-we do, will there be contrarian buying and a bottom in prices. I would have thought there’s been plenty despair in the last four plus years, but I am curious what you think of “analysis” such as Hulbert has vomited? Does it makes any sense?
Answer from Fleck: “That is such COMPLETE nonsense. How can anyone know that there isn’t enough despair? Anyone who claims they know that is delusional. It is the reason he is a writer and doesn’t run money!”
Question: Is the Fed already trapped? It feels like we’re now in a zone where good news puts a damper on the market because of a potential rate increase, and bad news isn’t being met with as much jubilation as the past, so the market doesn’t get much of a lift from the bad news now either. In other words, it feels like the power the Fed once had over the market has weakened quite a bit.
Answer from Fleck: “Maybe, but the bigger deal is that the market is exhausted and a bear market is underway. That trumps everything, if I am right.”
Question: Maybe time to add to gold stocks? Seems like they are out-performing gold the past couple of days. I expected more of silver though.
Answer from Fleck: “I think I would let gold get back over $1,100 or so before I would add, unless you don’t own any to start with.”
Question: Hi Fleck, in the FWIW category, Larry Edelson yesterday came out and said the following:
“Over the past several months I also told you that while this crisis would ultimately cause gold, silver and other key commodities to soar, it was too early to begin investing in these areas. The bear market that has plagued commodities since 2011 showed no signs of ending. In fact I expected that the bottom would not come for many more months — until well into 2016. I was wrong: The four-year bear market in gold, silver, oil and other commodities is beginning to end NOW!”
I normally wouldn’t give much credibility to this but Edelson has been really good at predicting the trajectory of gold and silver. He rode gold up last decade and then correctly called the top in 2011. More importantly, he has been a staunch bear in the metal since the top advising clients to sell every time there has been a bounce in the metals. Every time! He would always say “yes, long term I am very bullish gold and that one day it trade north of $5,000 an ounce but it has a lot further to fall.” Yesterday is the first time he has reversed his position on gold since he recommended dumping it at the top in 2011. Like I said, FWIW. Also, what exactly did Druckenmiller do with his GLD holdings? He kept it and added GLD calls on top? Did I read that correctly? Thanks for all you do……
Answer from Fleck: “Thanks. Stan only had GLD calls, he didn’t own the GLD. Those calls have expired or he sold them, as he now shows no GLD position (nor NEM, for that matter).”
***To subscribe to Bill Fleckenstein’s fascinating Daily Thoughts CLICK HERE.
***KWN has now released the powerful audio interview with Nomi Prins, the keynote speaker who recently addressed the Fed, IMF and World Bank, where she discusses the coming financial destruction that is in front of us, what is going to put an end to the manipulation of the gold and silver markets, what investors can do to protect themselves and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Commercial Hedgers Aggressively Cover Shorts As The War In Gold Rages CLICK HERE.
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