With the price of gold tumbling near $1,275 and silver below $15, today a legendary short seller discussed the war in the gold and silver markets.
Semis Lead The Charge Into The Ozone
By Bill Fleckenstein President Of Fleckenstein Capital
April 16 (King World News) – The indices were somewhat bifurcated early on, with the Dow and S&P not getting very far, while the Nasdaq was 0.5% stronger through midday, with semiconductors leading on the upside. Why that would be the case I can’t say, other than folks are obviously placing bets on the chunky second-half rebound they are expecting…
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In the afternoon, the market drifted sideways-to-lower, with the indices finishing mixed and not far from unchanged. Let’s see how Netflix and IBM do in tonight’s episode of the Wall Street clown show: Beat-the-Number.
Unloading the Clown Car
Away from stocks, green paper was quiet and mixed, fixed income was heavier, silver was about unchanged (for what it’s worth, copper was flat, too), gold lost 1%, and the miners were shellacked. There was no particular reason for the selloff in gold, other than there were huge sell orders in the futures market (which is often the case when large speculators are trying to push the price around). That occurred just as the gold price was near an “important” spot on the chart, which broke, and away it went.
When the Commitment of Traders Report is released on Friday, it will be interesting to see what the positioning is in the futures market. Although the war between commercials, specs, and other players is an important variable, it is still kind of a sideshow. The real problem the gold market has faced is a lack of serious buyers (other than central banks and Asians, who buy on weakness).
Included below are two questions and answers from the Q&A’s with Bill Fleckenstein.
It Won’t Be Nearly As Easy As It Sounds
Question: At this point, everyone at the fed, government, president, treasury has admitted the only thing that matters is where the S&P is. And they will do everything within their power to make sure it goes up, at the expense of pretty much anything. While gold/silver have largely ignored this fact, the question is why not be long the market? Isn’t the risk of not participating in the most coordinated effort to keep the bubble inflated greater than being stuck in cash – or worse PMs?
Answer from Fleck: “If you think you have a plan to get out when the bubble bursts, go ahead, but I guarantee you it won’t be nearly as easy as it sounds. The risk/reward is terrible, and the probability of winning is lower than it seems, despite how easy it all looks.”
Question: I wish gold stocks were as “forward looking” as chip stocks.
Answer from Fleck: “Yeah, me too.”
***Also just released: Fred Hickey – 8AM Gold Futures Dumps Disgusting As Gold Market Now Set Up For 2000-2012-Like Upside Explosion CLICK HERE TO READ.
***To subscribe to Bill Fleckenstein’s fascinating Daily Thoughts CLICK HERE.
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