On the heels of a huge day for gold, today one of the greats in the business said the Fed is trapped, with no way out and that Paulson’s fund shutdown marked a bottom in the gold market.
QE: No Way Out
Here is a portion of today’s remarks from Bill Fleckenstein: It is important that people understand that while 10 years is big chunk of one’s lifetime, it is a very small piece of history from a big-picture perspective. I say that because the QE experiment has now gone on for 10 years and so far all we have seen is the upside. And people being people, they have concluded that there is no downside.
Those of us who think that central banks holding rates at 0%, or less, and monetizing government debt is a horrendous policy that only leads to economic distortions and misallocated capital have been made to look foolish because it has gone on for so long. In classic crowd behavior, the fact that it has gone on has convinced folks that the future will be just like the recent past and those of us who worry about these things are wrong and the proper course of action is to flock to hard-charging stocks and cryptocurrencies.
I believe we are rapidly approaching the time where it will be possible to have definitive thoughts about how things will play out because there is zero chance that the Fed will be able to accomplish quantitative tightening or tapering, or whatever you want to call it. But until it is possible to have a strong view about the timing of events, I am going to continue to say I just don’t know, nor does anyone else. That is because QE and QT have never been done before so no one has any historical data points.
I will have more to say on this subject as it becomes possible to plot a course regarding how the post-QE world is liable to play out.
A Different Sign of Exhaustion
On a related note to gold, John Paulson has shut down his gold (and credit) fund, so it would be perfectly in keeping with the perversity of markets to have that outcome mark an important low in the price of gold. It doesn’t matter that this news involves gold and Paulson. It could be any market and any big player. I just point it out for the educational value of the potential irony.
32 Years In The Business
KWN – I just wanted to add to what Fleckenstein said above with this brilliant note from one of his readers:
“I know you have highlighted this many times for your readers, but it is well worth repeating. Human beings have very little to do wit the volume in stocks we are seeing. I manage money and have been in this business for 32 years. 90% of what you are seeing is two computers trading between each other managing different strategies. There is very little information in trading volumes. What is surprising is that this is also true for small cap and even micro stocks. Nothing is immune. We live in a world where buyers are higher and sellers are lower. The opportunities for human insight have never been higher, but the ability to get run over has also never been higher.”
Speaking of gold…
In The Footsteps Of Giants
One of the top questions KWN receives from investors about the mining industry is always: “How do you know out of the thousands of companies there are to choose from which will take-off and which ones will falter?” The answer for smart money investors is always to look for proven leaders with previous success as a good indicator of future success. One individual that fits this description is pictured below with multi-billionaire Robert Friedland.
Multi-billionaire Robert Friedland chose this man to lead his exploration team and it turned out to be a brilliant move because he was responsible for two of the largest and most important discoveries the world has ever seen while leading the team at Ivanhoe Mines. Investors across the globe are now following this man into his latest venture where he will help lead an exploration team where the CEO believes the team will deliver drill results that will send the stock price soaring more than 1,000 percent! Also, a legend in the business just made a 7-figure investment into this relatively unknown company. To get in on the ground floor and learn more about this remarkable company simply CLICK HERE.
For those who missed it, KWN has just released a new audio interview with Keith Neumeyer discussing $8,000 and $10,000 price targets for gold as well as what he expects to see in silver and the mining stocks and you can listen to it by CLICKING HERE.
***Also Just Released This Is What Will Really Move The Markets After Today’s Fed Decision CLICK HERE.
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