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Fleckenstein - His Concerns About MF Global, Gold & More
With mounting concerns about the MF Global collapse, gold trading down roughly $50 and silver falling more than $1, today King World News interviewed Bill Fleckenstein, President of Fleckenstein Capital, to get his take on the situation. Fleckenstein had some fascinating things to say about the MF Global disaster, but first he discussed the action in gold, “Gold is volatile like anything is volatile. People tend to forget that when you have an $1,800 price, a one percent swing is $18. Today gold is down 3%, but it is part of what we see all the time. This happens often. I don’t exactly know why it’s down $50 today, but it is what it is.”
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
December 12, 2011
Bill Fleckenstein continues:
“I don’t know that anyone thinks corrections are that much fun, they are only healthy in hindsight. It just happens. This has happened over and over and over again. It’s just part of the process. It seems to me that sentiment is rather poor. There has been tremendous liquidation in the futures market, both for gold and silver.
Obviously more liquidation could take place. What has been interesting, though, is the fact that at least in gold the number of ounces held by the ETF continues to be near a peak, while the futures market keeps seeing the longs shrink. So it would appear people who are buying the ETF, which is more of a physical mindset, continue to buy and hot money types continue to sell.
So next time gold goes on a huge run you can be sure that some of the same firms that are selling it down here will probably be buying it up there, that’s the way it goes.”
When asked about the MF Global situation, Fleckenstein responded, “I think on the commodities side of things there is a real credibility problem. In this case, the self regulation didn’t do anything and the CME didn’t do much better....
Continue reading the Bill Fleckenstein interview below...
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“Corzine appears to have been able to have lobbied the regulators to get away with what appears to be some sort of an in house repo. That looks like it might have been what happened to customer funds. I should say we don’t really know what they did exactly and we don’t know how much has been lost.
But I think they have certainly undermined confidence as it pertains to people feeling like brokerage firms are creditworthy. Now there is all of this angst over hypothecation, rehypothecation. I don’t know that it will change the credibility of the stock market, that’s been a slow leaking boat for some time, but I think they are going to have to pass some laws about what these financial entities can do.
Congress is completely incompetent. What needs to happen is financial institutions, whether they are banks or brokerage firms or whatever, they need to make the directors and officers personally responsible for losses. Directors in Switzerland face that, they now face it in Brazil and it used to be that way in our country.
If these financial institutions, if the directors and officers faced personal losses, do you think anyone would have been leveraged up 40 to 1 in the last go around? You think any of this crap could happen? There’s not a chance. Congress is so stupid, they pass Sarbanes-Oxley, did that prevent anything in the last real estate bubble, any of these financial entities from blowing up? No.
Now they’ve passed this Dodd-Frank Bill. It’s just garbage. There are so many intelligent solutions to a lot of our problems and yet all they do is make the situation worse. It’s pathetic.
I’ve been rather vocal, as have others, about how useless financial statements are for financial entities for over a decade and nothing ever changes.”
Fleckenstein also shares his thoughts on the hypothecation, rehypothecation situation which has so many investors concerned. The KWN interview with Bill Fleckenstein will be available shortly and you can listen to it by CLICKING HERE.
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
Eric King
