With the dollar surging and gold trading higher as well, one of the greats in the business thinks this may be a harbinger of the future.
Wesdome (WDO, WDOFF). They’ve had impressive drill results and a raft of insider buying similar to what we saw with KL. I recently made a purchase and when I talked
it over with Fred Hickey he had been aware of it and had bought
some as well. — Bill Fleckenstein, June 11
By Bill Fleckenstein President Of Fleckenstein Capital
June 14 (King World News) – The macro event du jour was the ECB meeting, and it turns out that Mario Draghi was more dovish than expected. While he did announce they would be ending QE this year, he signaled that rate hikes would be far off into 2019. That apparently was meeker than the market expected, as the euro was crushed for 1.7% in the wake of that news…
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That Must Affect Its Depth Perception
How much of this is a short-term overreaction or what it means exactly is a little hard to say. However, I would note that as bad as the Fed is, the ECB is worse and the Bank of Japan even more so when it comes to being completely irresponsible. This makes the dollar the one-eyed man in the land of colored paper. But that isn’t saying much.
In any case, net-net the stock market liked all the news, led once again by the Nasdaq, which gained 0.75% in the first hour with the Dow and S&P adding about 0.5%. In the afternoon, the rally stalled out and the indices closed mixed: the Nasdaq was up 0.8%, the S&P 0.3%, while the Dow was slightly lower.
Will Take On All Comers
Away from stocks, green paper was a lot stronger, particularly against the euro (as noted), oil was a nonevent, and fixed income was aggressively higher (though I have no idea why). The metals were initially higher, as silver gained 1.5% to gold’s 1%, but they then reversed course with the euro. However, they both still closed up on the day: 1% and 0.2%, respectively. For once, the metals rose against all major flavors of colored paper, which is a harbinger of the future, I believe.
Included below are two questions and answers from the Q&A’s with Bill Fleckenstein.
Dollar, Interest Rates & Gold
Question: Bill, post the rate hike Wed., dollar firmed and gold sold off a bit, and then it came back and the dollar sold off some. It’s a presumption that higher rates mean lower gold, higher dollar. So I kinda want to understand this action where gold does okay (for now) although it ain’t going anywhere fast. Do the markets look so far ahead to think that higher rates will (eventually) harm the economy and bonds and stocks that the Fed will have to halt the hikes (as currently planned into next year) and MAY even have to reverse course and go back to QE (if things get bad enough)? Thanks much!
Answer from Fleck: “I can’t really follow that question. The dollar rally is over, IMO, as I have noted several times. Gold has had a tendency to rally after rate hikes, so today’s action isn’t shocking. I must have stated 100 times that rate hikes are not bad for gold, per se. They can be, but historically they have not been most of the time. Bottom line, saying “it’s a presumption that higher rates mean lower gold,” is an incorrect supposition.”
QE & QT
Question: It’s funny, but if somebody told you on January 1st that WFC, C and GS were going to be all -8% YTD (forget about DB – 40% YTD) by mid-June – most people would take the stock market under (on the notion that so goes the piggies (banks), so goes the poke. This market is one for the books, too bad I have to come to work each day and try to make sense of it (invest people’s hard earned money).
Answer from Fleck: “I hear you. Very little makes much sense. That is what QE has wrought, and QT has not yet taken away.”
***To subscribe to Bill Fleckenstein’s fascinating Daily Thoughts CLICK HERE.
KWN has now released the powerful audio interview with London whistleblower and metals trader Andrew Maguire and you can listen to it immediately by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Multi-Billionaire Hugo Salinas Price – Trump May Shock The World By Putting U.S. Back On Gold Standard CLICK HERE.
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