As we move through the last trading week in September, today Bill Fleckenstein discussed the recent weakness in the gold, silver, and mining share markets.
By Bill Fleckenstein President Of Fleckenstein Capital
September 27 (King World News) – Overnight bond markets were higher, with German bunds (inching back toward their highs) at around -15 basis points. Equity markets in Europe were weaker, however, weighed down once again by the banking system there…
IMPORTANT:
To hear which legend just spoke with KWN about $8,000 gold and the coming mania in the
gold, silver, and mining shares markets CLICK HERE OR ON THE IMAGE BELOW.
Yesterday I pointed out how Deutsche Bank didn’t have much of a market cap, given the size of its balance sheet, and certainly the proposed $14 billion fine from the Justice Department would wipe out all its equity should it actually be enforced. Thus, DB is in a world of hurt (as its CDS market can attest to). For some perspective, its $13 billion market cap needs to be compared to its debt, which totals around $160 billion. And to put that ratio in context, Citicorp has a market cap of around $130 billion to deal with its debt of $163 billion.
From Bad to Wurst
Of course, Deutsche Bank is not the only European bank with issues, as many Italian institutions have precarious balance sheets as well. So the most obvious catalyst to blow a hole in the nonsensical TINA party is a European bank debacle, which can then lead to something else (like Italian contagion). But for the time being, in the aggregate, markets do not seem to be too terribly worried.
Turning to our stock market, in the wake of last night’s debate the S&P climbed about 0.75%, although most of that gain was gone by the time New York actually opened. However, once the stock market backed off to around unchanged it began to climb again, led by the Nasdaq, which gained about 0.5% through midday compared to rounding error gains for the Dow and S&P.
In the afternoon the market pushed a bit more to the upside and closed 0.75% higher, plus or minus. Away from stocks, green paper was stronger (mostly against the euro, for the banking reasons cited above), oil lost 3%, fixed income was higher, and silver lost 1.5% to gold’s 1%.
There’s No Hurry
Note that I did not discuss last night’s debate, nor do I intend to discuss anything about the election until it is clear who will win and what the economic/financial ramifications of that will be.
Included below are three questions and answers from the Q&A’s with Bill Fleckenstein.
Bonus Q&A
Fleckenstein On The Recent Weakness In Gold, Silver & Miners
Question: Bill: the news is silver is softening of late and the reason is causing this is the slow down in production in the use of silver in China. wondering if this situation will keep silver soft going forward for a while. the financial news reports seem to celebrate this. is this just noise? thanks for all you do for all of use..
Answer from Fleck: “Yes. People usually make up stories to fit market action.”
Question: Bill: Many miners showing head-and-shoulders or double tops, as well as bumping their heads on downward sloping 50-day lines. Will you hold off purchases until these hurdles are cleared? AEM and GORO seem to be among the very few current survivors. Thank you.
Answer from Fleck: “I don’t have to do much, as I have a lot of exposure. I may/will add for a trade if I get the right setup. But I think you are over-dramatizing the current situation. You make it sound as though a collapse is imminent.”
Question: Bill, The gold mining complex seems to be acting more poorly lately, in spite of a weaker dollar. In fact, it seems to be much more correlated with the general stock market. Do you think this is just a “couple of months” phenomenon? It has been happening in August & September, just when gold seasonally does better and stock do worse. Do you see a catalyst that will return the precious metals miners to move inversely to broad stock indices? Thanks for your invaluable service and many insights.
Answer from Fleck: “First, the dollar is barely weaker at all, so that’s not meaningful. Not sure what it will take exactly to get gold to break, but something will. For the umpteenth time, miners do not move conversely to stocks generically. They follow gold, which can react to news that causes stock weakness by going up or down. There aren’t any hard and fast rules.”
BONUS INTERVIEW: To listen to a special interview that has recently been released with Keith Neumeyer discussing $8,000 gold and the coming mania in the gold, silver, and mining share markets CLICK HERE.
***KWN has now released the remarkable interview with the man who helps oversee $180 billion and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***Also just released: John Embry Warns Global Implosion Edges Closer CLICK HERE.
***KWN has just released an absolutely jaw-dropping interview with the man who advises the most prominent sovereign wealth funds, pension funds, hedge funds, and institutional funds in the world and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
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