Today a famed short seller said the price of silver will soon move substantially to the upside.
By Bill Fleckenstein President Of Fleckenstein Capital
April 13 (King World News) – Overnight markets were quite strong, with Asia roughly 3% higher and Europe up a couple of percent, so naturally our stock market joined the festivities, gaining a little over 0.5% through midday (though the Nasdaq added 1%)…
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Any Excuse Will Do
I have nothing to which I can attribute all of the celebrations, either here or there. Some might say that having J.P. Morgan win at beat-the-number was a very positive catalyst, though obviously that isn’t what powered the rest of the globe, and of course a negative retail sales number surprise (a decline of 0.3% versus expectations of a 0.1% gain) was completely ignored.
In the afternoon, prices chugged higher as the day’s gains were about doubled. Away from stocks, green paper was quite a bit stronger today after its recent bout of weakness, oil lost 1%, fixed income was slightly higher, and the metals were mixed with silver gaining 0.3% and gold losing 1%.
The Quick Silver Fox Jumped Over the Yellow Dog
It has become quite clear in the last week or so that silver is stronger versus gold and it continues to feel to me like it is going to make a pretty substantial move pretty soon.
Included below are two questions and answers from the Q&A’s with Bill Fleckenstein.
Question: I appreciate this comment from yesterday.
Your “coiled spring” guy today nailed it. It should be remembered that Gross, and most other big bond managers, for many years leading up to 2008 had the same sold volume positions in credit markets. That didn’t turn out well, and the credit market’s collective sold vol position exacerbated market chaos back then until the Fed cavalry arrived.
I would appreciate it more if you could take a moment and explain “the credit market’s collective sold volume position”. Your readers have varying degrees of sophistication. I am finding myself in the lower half on this subject. Thanks.
Answer from Fleck: “He just means that collectively, market participants have sold a lot of volatility (i.e., premium in the form of puts and/or calls) making it more likely that any “surprise” would be exaggerated.”
Question: Bill, you have recently mentioned many times that you are holding off on the short side of equities. You’ve also said that being long gold and gold miners is the better bet. I agree and have positioned myself likewise. If and when the time comes to short equities, will it be a substitution for the gold sector investment or will you be playing both ideas to their ends?
Answer from Fleck: “It won’t likely be me selling miners to get short, I’ll just do them in addition to my miners.”
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