With the dollar falling as the Dow rallied 76 points, one of the greats in the business sent King World News a fantastic piece discussing the wild trading in global markets, plus a bonus Q&A that includes questions on gold, inflation and the miners.
By Bill Fleckenstein President Of Fleckenstein Capital
September 10 (King World News) – Overnight markets were weaker to the tune of a couple of percent, and the SPOOs were lower as well, but the market rallied nonetheless basically as soon as New York opened. By midday the indices had gained 0.5%, with the Nasdaq leading the charge and doing a bit better…
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Continue reading the Bill Fleckenstein piece below…
The market peaked in early afternoon (with the Nasdaq over 1% higher), but it backed off from there to close with a gain of about 0.5%. Away from stocks, green paper was weaker, fixed income was as well, oil gained 4%, and the metals were just slightly higher.
There really isn’t a whole lot to say about today’s action, but I would grade it as modestly bearish, despite the rally.
Included below are three 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: Why would I want to buy the gold miners when I can buy the ETF (GLD)? You get exposure to gold without all the overhead costs of a miner. Its frustrating to watch the GLD go up and the miners barely move! This relates to an article by Barry Ritholtz.
Answer from Fleck: “Because they are so cheap they will rally a lot more, but it is fine to own gold. It is all up to you.“
Question: I read today that there is now a unprecedented 228 ounces of paper claims for every ounce of deliverable “registered” gold. Appears from about 2000 to 2013 average looks like it as 10-20 ounces of paper claims per oz of physical gold. Is this a significant development worth monitoring?
Answer from Fleck: “In the past this has never mattered, but one day it well may. And if actually it does, it will matter in a very big way, not a small one. This is the recipe for an epic squeeze, though that doesn’t mean it will occur.“
Question: “Pigs help China fight off threat of deflation” the headline screams. Followed by “Higher pork costs have pushed up inflation in the world’s second largest economy” “A lack of pigs has helped buoy the Chinese economy, helping to fend off a slowdown that economists have warned could wreak havoc on a global scale.”
I got it. Mental hospitals were closed years ago because the outside world is so full of insane people. Only crazy people (economists, financial reporters, central bankers) would say that an increase in the price of pork is boosting the whole of China’s economy and that of the whole Earth.
Answer from Fleck: “It is part of the bizarre logic that says we need inflation for economic growth. These headlines you found help show the absurdity of that thinking.“ ***To subscribe to Bill Fleckenstein’s fascinating Daily Thoughts CLICK HERE.
***ALSO JUST RELEASED: An Astonishing Look At The War In Silver And Commodities CLICK HERE.
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