Today a legendary short seller covered gold, the dollar and much more, ahead of the KWN release of whistleblower Andrew Maguire’s interview.
By Bill Fleckenstein President Of Fleckenstein Capital
August 8 (King World News) – The market chopped around unchanged through midday, spending most of the time slightly red. In the afternoon, it was more of the same as the market finished essentially flat…
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Away from stocks, green paper was very weak, with no proximate reason for the weakness that I could tell. Meanwhile, fixed income was on fire and oil was flat. The metals gained over 1% apiece and the miners had a relatively decent day.
The pronounced weakness in the dollar thus far this year has not received that much attention, but obviously the incredibly bullish tone it had at the beginning of the year has turned into the opposite. In my experience, when currencies see a change of this order of magnitude, it tends to last for quite a long time.
They Will See Themselves Out
On a related topic, Trump will now have a chance to appoint potentially four new members of the Fed. The future of the dollar could definitely be impacted by his choices, and although I have absolutely no idea who he might pick, I do suspect they may be inclined toward easy money. Given his past history, he is certainly going to favor clueless doves (see today’s headline) over anyone who can even spell the word “hawk.”
Included below are three questions and answers from the Q&A’s with Bill Fleckenstein.
The Ultimate Contrarian Indicator
Question: Bill, a personal anecdote – I’m on my company’s 401k investment committee board. I’m one of the few employees in the company with a self managed brokerage account. All three of the representatives from our fiduciary, plan administrator (Fidelity), and investment adviser, laughed at the “stupidity” of owning gold and gold stocks. I laughed myself but for obviously different reasons.
Answer from Fleck: “Let us know when they decide the gold complex is finally a good idea!”
Dollar Weakness Will Be Long, Multi-Year Decline
Question: Bill: I was just noting your somewhat blase comments about the action in gold and the miners the last two days (having lost about 3-4% yesterday and today). So I checked the currencies, and sure enough, that explained it. As a Canadian, my Loonie is up 3-1/2% in the last 5 days, with Wednesday accounting for nearly half the action. Now, I have to assume that the Loonie is driven by the interest rate hike, because it’s sure not about oil or our stable housing market. I do believe Canada has a huge advantage over the US because (1) we don’t spend a trillion a year on defense-surveillance-veterans, and (2) giving health care to everybody costs us 1/3 per capita what the US spends on its so-called market in healthcare. Obviously neither country wants a strong currency, and Canada is still waiting for its real estate bubble to burst a decade after the US. I know you used to like the Canadian dollar. Honestly, I don’t think it’s all that special right now, but it’s certainly on fire. Have you regained interest in the Loonie during its climb from 72c to 82c over the past 4 months (not that I think you should)?
Answer from Fleck: “No, I’m agnostic on the loonie. I have no interest in any G7 paper currencies. They all suck.”
Don’t Believe Anti-Gold Propaganda
Question: Do you think this is true: “Breaking a long trend, demand for gold jewelry in China and India has plummeted in recent years, dragging global demand to its lowest level in seven years.” Presumably, investor demand has outweighed the decline in retail demand from China and India.
Answer from Fleck: “No idea where that came from, but snapshots of any given period can be misleading. In general, it isn’t true.” ***We apologize for the delay, Andrew Maguire KWN interview will be released shortly!
***ALSO JUST RELEASED: Andrew Maguire Interview About To Be Released But First, Take A Look At This… CLICK HERE.
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