Today the US dollar appeared in danger of reversing its countertrend rally as gold surged toward $1,300, plus the key level for the big move.
By Bill Fleckenstein President Of Fleckenstein Capital
November 22 (King World News) – The stock market was uneventful all day and closed about flat (however, there was some intense speculation beneath the surface, e.g., Riot Blockchain)…
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Away from stocks, green paper was about the only interesting feature of today’s trading, as it was quite a bit weaker. The action makes me feel like the recent dollar rally has run its course, as it (perhaps) gives way to renewed weakness. Oil gained 2%, fixed income was higher, and the metals rallied, with silver and gold gaining 1% apiece.
They Won’t Miss Their Water Till the Well Runs Dry
There is still not a lot to say about the stock market that is new or insightful. That said, I also feel like 2018 is liable to see a big reversal, given the increase in QT on the part of the Fed and the cutting back of QE on the part of the Bank of Japan.
We must remember that the only reason the markets are where they are is because central banks have printed as much as they have. Thus, there is no chance they are going to get very far with their cutting-back/withdrawal schemes before there are real problems.
Included below are three questions and answers from the Q&A’s with Bill Fleckenstein.
Confidence Is Key
Question: Just read an article about these young people who bought bitcoins back in 2011 and now are millionaires, and gist is how much of an investment genius they are vs. perhaps how lucky they are. There is also story in article about how one person won’t sell since he knows it will go up more and more. Reminds me of my brother who bought $500 share of Akamai stock at around $20 for IPO – and it went to something like $450 – but he didn’t sell since he thought it would go up more. Or my cousin who owns a house in Ft. Lauderdale he bought for $350k. It was appraised by a Real Estate agent at $750,000 around 2006. A year later, when “value” had gone down to $700,000 he thought of selling but didn’t want to leave $50,000 on the table, so figured he’d sell when it went back up (now its back to around $350,000). So, lots of stories. But the reader who send in the comment that the bitcoin returns should be ours as Gold holders – that did hit a nerve.
Answer from Fleck: “Why should they be “ours”? Bitcoin buyers are largely chasing price like FANG buyers. Should FANG money belong to gold holders, too? Gold will do very well when confidence in central banks wanes.”
That Will Be Impossible
Question: Bill, what is being done by the CB’s is unprecedented? In a normal market exhaustion leads to the downturn but if your source of capital is printed out of thin air, can you not buy indefinitely? Just crazy how long this has gone on at the expensive savers…
Answer from Fleck: “But the Fed has started QE. Part of the magic is the fact that you are supposed to declare victory and withdraw all the liquidity. That will be impossible.”
Key Level For Big Move
Question: Bill: I have two miner heavy accounts and about 6 months ago in one of them, swapped GDX for DIA, in essence…. 15% net delta positive for me using blind (squirrel) stock market purchase. I just wanted to feel like the many nitwits that are making gobs of cash in the market. I kept the other miner account and really “just want to break even” as they say. Break even is GDX 30 roughly. There must be tons of haggard miner investors also looking to just get out, maybe at that same “obvious” recent peak. Would you agree that that GDX proxy level of 30 or so will be difficult to pierce, and stay above, should we get there in say a year or two? That level stands out like a mountain top. Thanks much!
Answer from Fleck: “No, I don’t think 30 will matter that much. I think once we finally clear 25-26, I think the big move will be underway. I don’t see 30 as a big deal. Just because it matters to you doesn’t mean much in reality, and it isn’t a big spot on the charts either, IMO.“
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