Today a legendary short seller covered gold, the dollar and much more, ahead of the Fed news on Wednesday.
By Bill Fleckenstein President Of Fleckenstein Capital
September 19 (King World News) – Trading through midday was sort of a nonevent, as the market just marked time around unchanged. With an hour to go, when I had to leave, the indices were about flat…
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Away from stocks, there was a modest amount of motion, but nothing of any consequence, as green paper was basically flat, along with oil, fixed income, and the metals.
Sparse Attendance at No-Surprise Party
It would seem that, once again, the mere prospect of an FOMC meeting has all outside markets afraid to make a move, lest they get caught offside by some sort of surprise from the very entity that never surprises anyone.
As far as the metals go, I saw some people voicing disappointment that gold didn’t rally on Trump’s UN speech. I just have to say that the mere fact that he acknowledged the obvious is certainly no reason for precious metals to surge. After all, his views on North Korea are not exactly new news, and he really didn’t say anything. So to get dejected over the fact that the market didn’t move over something ridiculous is even more ridiculous.
Very important note from Fleckenstein yesterday…
Precious Metals Fear “Feds” On Itself
While this is not new news and has been the pattern for some time, it remains interesting how the stock market has absolutely no fear about what the Fed may do, meanwhile the metals market seems to be terrified that Yellen et al. will say something on Wednesday that will subject it to a beating. Thanks to worldwide QE, stock bulls here have no fear of anything and they feel that the Fed has their back, while investments focused on the consequences of those policies continue to be battlegrounds.
My guess is that by the time Wednesday’s FOMC séance has come and gone, this most recent correction in the metals will probably be over. I will be curious to see what the stock market does, as it appears bulletproof, but that is often when something unexpected takes place.
Included below are three questions and answers from the Q&A’s with Bill Fleckenstein.
Question: Fleck, just finished Rainbows End, pretty amazing book, I can see how many academics would think if the government and fed would have done more they could have prevented the crash and depression. My question: If central banks pull out all the stops to prevent the next down move is hyperinflation the only result? And if that is the case how do these central bankers think they can stop hyperinflation once it starts?
Answer from Fleck: “Let’s wait to see how it plays out… We don’t have to answer that question yet. Hyperinflation is not predetermined, but more inflation is – though it does not spread out evenly, as we have already seen.”
Question: $GG as a long term hold for last two years hasn’t really been great, unless of course you buy dips, sell rallies. Do you have an idea why it’s performing so poorly?
Answer from Fleck: “People don’t like it, prior top management was not very frugal… But that opinion will change, IMO.”
You Can’t Catch Every Squiggle
Question: Dear Bill, I thought I had learned how to game the PM markets pretty successfully from reading the Rap off and on since 2000. But based on Ask Fleck comments over the past few days, I appear to be the only idiot that didn’t get my positions sold when gold was around $1350 last week…
Answer from Fleck: “You are overreacting. You can’t catch every squiggle, nor can anyone.”
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