The piece below discusses a real surprise that is taking place in the gold market and it comes from an extremely reliable source.
By Bill Fleckenstein President Of Fleckenstein Capital
September 14 (King World News) – Overnight markets were a nonevent, while the early going here saw the Dow and S&P modestly higher, with the Nasdaq gaining about 0.75%, led by Apple, which rallied 4% on the back of hype/hope regarding the iPhone 7. It is pretty mind-boggling that AAPL has bounced as much as it has on this news, but it does illustrate how — despite budding angst about the stock market in general — folks are more than willing to suspend disbelief on any subject at the drop of a hat…
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In the afternoon, however, the rally reversed, with the Dow/S&P ending the day with a tiny loss, while the Nasdaq remained slightly higher. The market is finally starting to really act as though it has exhausted itself on the upside (at least until the FOMC meeting!).
Away from stocks, green paper was weaker, oil lost 3%, fixed income saw a nice bounce, and the metals lifted a bit with silver gaining 0.5% to gold’s 0.3%.
Innocent Till Proven Gilt-y
On the subject of gold, in a discussion with the Lord of the Dark Matter, he pointed out that it would appear that certain risk/parity operators have been buyers of gold because the bond market has not been “behaving as it should.” I’m not sure what to do with that information, nor what it exactly means: i.e., is it bullish, bearish, or irrelevant over the short- or long-term? I don’t know and I actually hesitated to bring it up because it doesn’t do anyone much good to say, “Here’s something to think about” when you have no idea if it is even important.
Nonetheless, it could explain some of the recent heaviness in gold as stocks and bonds have been pounded. Having said that, I know I am going to get a zillion questions about the implications for the next decline, as I seem to get that question multiple times a week already, even though I really don’t have the answer. But I thought it was worth passing the information along because it may turn out to be a useful piece of data at some point…or not.
Included below are three questions and answers from the Q&A’s with Bill Fleckenstein.
Bonus Q&A
Question: Have been talking with a gentleman for the past 6 months who has been a major player in the golf course business for the past 40 years. He has mentioned to me many times in conversation that the high end private market has been doing fine but mid to lower end market has not been doing well. The cause for the mid to lower end market not doing well, was they were having to charge green fees today that they were charging 15 to 20 years ago and their cost has risen a lot during the same time frame. Sounds like stagflation to me.
Answer from Fleck: “We have been enduring a form of low-grade stagflation for some time now. However, it isn’t viewed as such. So far.”
Question: Hi Bill, I found it interesting that your long term plan included moving more to on hand physical bullion at some point. I`m guessing you can make multiples of the gold price in gold stocks but do you have any concern of a sudden, swift and epic collapse in markets that would make obtaining any sizable amount of physical gold next to impossible?
Answer from Fleck: “No, none.”
Question: Hi William. Do you expect the selling in the miners to exhaust itself in the next day or two or continue until the fed meets next week? Doesn’t this seem way overdone considering Gold is still above $1300? Shaking out the week hands? No way are we going into a bear market in the metals again! Thank you.
Answer from Fleck: “No way to know in advance. Some have fared worse than others and seem way overdone, but these are markets and overdone (admittedly subjective) doesn’t mean the selling has to stop. FWIW, note the change in the tone of the question in the last couple weeks as bravado has turned to angst.”
IMPORTANT
King World News note: KWN has been getting many emails from our readers and listeners around the world asking about which mining stocks to invest in for the bull market in gold, silver, and the mining shares. As a result, KWN has been actively in talks with the highest quality mining companies and management teams that offer the best opportunities for investors in the mining sector, that are being allowed to sponsor King World News by invitation only. One of the companies we recently introduced to our global audience was Brazil Resources, and many of you have listened to the audio interview KWN did with Brazil Resources Chairman. In that audio we discussed the recent acquisition being the most important in the history of Brazil Resources because it should increase their gold resource by a remarkable 50 percent.
Well, the resource estimate was just released today and the number of gold ounces increased from 10 million ounces to a staggering 18.1 million ounces! And the gold equivalent resources increased from 13 million to a jaw-dropping 23 million ounces! So both the gold ounces and gold equivalent ounces increased roughly 80 percent! Trading in Brazil Resources was halted before noon PST, and the halt continued for the rest of the day because the exchange felt that additional time would be needed for traders, investors, and institutions to digest the news and properly price the stock.
This is where understanding the news is extremely important. The chart below shows the valuation of gold in the ground. Note that Brazil Resources gold is only valued at $11 an ounce as of the time the stock was halted (see below).
The fact that Brazil Resources gold is only valued at $11 an ounce allows a great deal of leverage to upside price movements in the gold market, which is exactly what savvy investors look for. It will be interesting to see how shares of Brazil Resources trade in the coming days and weeks after the market digests this important news. The stock symbol for Brazil Resources is BRI in Canada and BRIZF in the United States.
KWN is constantly solicited by mining companies that wish to sponsor the network but they are rejected because they fail to pass a rigorous due diligence process that includes speaking to the most brilliant minds in the gold world about these companies. So KWN will only feature only the best investment opportunities for its readers and listeners and you can look forward to more companies being introduced in the near-future.
***For those who would like to listen to the audio interview with Brazil Resources Chairman CLICK HERE.
***KWN has now released one of Gerald Celente’s most important interviews of this year and you can listen to it by CLICK HERE OR ON THE IMAGE BELOW.
***Also just released: A Significant Upward Revaluation Of Gold Is Now On The Horizon CLICK HERE.
***KWN has also now released one of Bill Fleckenstein’s greatest interviews ever and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
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