On the heels of another wild trading week, Bill Fleckenstein told King World News this is the “first time in my life” I have ever seen something like this.
Gold Price Movement Today vs 2008
January 5 (King World News) – Eric King: “Bill, regarding gold, so many people were worried about 2008 (and how it negatively impacted the price of gold). And yet when you go back to 1973-1974, 1987, etc, when the stock market tanked, gold obviously traded inversely. So far that’s what we’ve seen. Gold went up to $1,300. It’s having a little pullback here, but gold has traded inverse to the stock market.”
Bill Fleckenstein: “Yeah. I think a lot of people maybe came of age in the investment business into 2008. And I must have gotten that question (from my subscribers) at least 50 times or more. But it seems to me so few people actually understood what happened in 2008. The fact that the very worst paper was owned by the biggest banks in the country, in America, and around the world, and they did it with leverage of 40/1 or 50/1, which meant that a 2% move was going to wipe out their equity, and a lot of these assets went down 70% or 80%, this was the setup for that bubble which was the complete implosion of the financial system. And it happened very rapidly….
NEW KEITH NEUMEYER INTERVIEW:
Keith Neumeyer spoke with KWN about $8,000 & $10,000 price targets for gold and much more, to listen immediately CLICK HERE OR ON THE IMAGE BELOW.
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Bill Fleckenstein continues: “But going into that (2008 collapse) a lot of people owned the metals (gold and silver) for a variety of reasons, some of which was because it was going up. You had seven years of gold going up and six or seven years of the miners trading up. So people owned them.
“For The First Time In My Life”
Going into this mess there was no hot money in gold. At the margin the hot money was short gold. And for the first time in my life, in my investment career, the mining stocks are demonstrably cheap. You know if something goes from 80 to 20, people say, ‘It’s cheap.’ That doesn’t mean anything. It’s relative to the underlying business and what they can earn and that sort of thing…
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Bill Fleckenstein continues: “Whereas in the past you could never really pencil out any non lunatic or crazy price of gold and get big earnings power for a lot of these miners, you can now. A handful of these that I own with the gold price where it is now are trading at maybe 8, 10, 12 times earnings. So they are not expensive and some of them have real growth potential. Some of them are selling at big discounts to book value. They are really quite cheap. That’s why I think that virtually every day the market has been pounded over the last month or so, gold has done better and the miners have done better.
People Were Afraid
People were afraid they (the miners) would turn into stocks, when they really aren’t. They’ve followed the path of gold and they didn’t get liquidated because nobody owned them. I’m so sick and tired of reading people saying that the margin clerks are going to make people sell gold. That is (A) not even accurate and it’s (B) so simplistic. How can they (the margin clerks) make them sell something when they don’t even own it?
All the damage was done to the miners and to gold going into this crisis. There was nothing left to squeeze out. Although I shouldn’t call what’s happened in the last couple of months a crisis — the decline in the stock market — it’s hardly a crisis yet…To continue listening to the outstanding KWN audio interview with Bill Fleckenstein discussing what he believes is in store for the stock market, gold, silver, bonds, China, and much more CLICK HERE OR ON THE IMAGE BELOW.
ALSO RELEASED: Michael Oliver: Something Big Is Underway, And Despite Pullback, Gold’s Rise Will Accelerate CLICK HERE TO READ.
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