Fleckenstein – Silver’s Decline, Plus A Q&A On The Fed, Gold And A Note From David Rosenberg

As the U.S.dollar continues to rally, today one of the greats in the business sent King World News a fantastic piece discussing the decline in the metals, particularly silver, plus a bonus Q&A about gold, the Fed, stocks, and a note from David Rosenberg.

By Bill Fleckenstein President Of Fleckenstein Capital

November 10 (King World News) – Overnight markets were a nonevent and the early going here saw the Dow and S&P slightly red, while the Nasdaq was 0.5% lower through midday. The leading catalyst for the latter weakness was a dead fish report that Apple has cut back orders to its suppliers due to sluggish demand for the iPhone 6s (surprise, surprise, who could have known?)…

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As a result, companies in the Apple food chain were roughed up disproportionately, and since they are all members of the SOX — a favorite speculative toy of hedge fund operators — that weighed on the Nasdaq.

The early weakness didn’t stick, as once again the market rallied back to flat (though the Nasdaq did post a small loss). Away from stocks, green paper was stronger, oil was flat, fixed income bounced, and the metals were weaker again, with silver making it nine days lower in a row, losing 1% to gold’s fractional decline.

Included below are five 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: If you could only make 1 trade to support your position on the Fed and its impact on the market over the next year what would it be?

Answer from Fleck:  “Long gold.”

Question: Hi Bill, how many minus DJIA 200 days do you think it takes for the Fed to change their mind (again) about raising rates at their December meeting? What a bunch of losers and the masses still think they can do no wrong.

Answer from Fleck: “Ten to fifteen.”

Question: Just some info. David Rosenberg said yesterday that gold is putting in a classic triple bottom. And he is looking for inflation to return in a big way,especially wage inflation. Further, he points to the TIPS which jumped from 1% in late Sept.to 1.26% yesterday on the 5 year. When Canadians start talking positively about gold,it is usually good to listen.

Answer from Fleck: “OK, thanks.”

Question: How will you determine whether this is the vaunted “failed” rally we have been waiting years for??

Answer from Fleck: “First, the market must stop going up. It did that. Next, we need to take out the August lows on no particular timeline. Then whatever rally comes after that can’t make a new high. Obviously, it will take time for all that to play out, so by the time you know for sure a lot will have happened, so between here and there, guesswork is involved. But if it does play out like that, there will be large consequences. Hope that helps.”

Question: To the reader comparing cash (essentially 0% return) to gold (8.8% annual return, using their figure) as being equivalent.. What?? 8.8% is immense for such a long period of time – and that’s with it doing poorly the last few years. I can’t believe I read that.

Answer from Fleck: “Agreed.”

***To subscribe to Bill Fleckenstein’s fascinating Daily Thoughts CLICK HERE.

***ALSO JUST RELEASED: Adam Smith And Jeff Gundlach On The Money Game And The Harsh Reality Facing Central Planners CLICK HERE.

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