Look at who just said gold, silver and the miners are set for big gains in 2018.
By Bill Fleckenstein President Of Fleckenstein Capital
January 2 (King World News) – The stock market wasted no time exploding higher as 2018 commenced, with the Nasdaq leading the charge and gaining over 1% in a little over an hour, while the S&P tacked on 0.75% and the Dow was dogging it. In the afternoon, the indices just seemed to sit there and were not much higher than I already described with an hour to go, which is when I left…
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Sucking In the ’70s?
I don’t think we will know much about what the market intends to do for the balance of the year until we get past the first few days, as there is often a lot of noise created by predetermined inflows. It wouldn’t shock me at all if this year turned out to be similar to 1973 when the market rallied for the first group of days only to fall apart very badly over the next couple of years — but I don’t want to prejudge the action.
Away from stocks, green paper was weaker from the get-go today and has continued to break down. This decline has been rather stealthy, as so many people were wildly bullish about it for a lot of different reasons. One of the surprises of 2018 is liable to be dollar weakness, although it is hard to get excited about any of the other paper currencies, as they are all just variations of the same bad theme.
Turning to fixed income, it was heavier, while oil was a nonevent. The precious metals gained ground with silver adding 1.5% to gold’s 1%, and the miners gave a pretty good account of themselves as well. At the risk of sounding like a broken record, I think the miners are set up to have a very good year in 2018 once we get the slightest change in psychology regarding the efficacy of central bank strategies.
No News Is Big Moves
On a related topic, that being cryptocurrencies, I would like to point out something that I think is very important. For those who haven’t been paying close attention, for no reason at all in the early morning hours of Dec. 22 (and for the rest of the day), Bitcoin and other cryptos totally fell apart, as the former traded from around $18,000 down to $11,000. Since that time it has tried to mount a couple of comebacks but has been unable to. It’s not possible to say that Bitcoin is finished just yet, but it could be.
The reason I bring that up is because of one important fact: there was absolutely no news, it just broke. Because that is what happens in manias, and chain letters, too, by the way: for no reason, they finally exhaust themselves.
Some Cryptic Tendencies
As I noted, it is a little early to say this is the case with Bitcoin, but it would not surprise me if it turned out to be true. What is also interesting is that, while Bitcoin has been under a bit of pressure the other cryptocurrencies have gone slightly wild, as the players in the crypto world push the Jell-O around the plate. That could be read as either a sign of strength or weakness for the whole arena, we will just have to see, and I will try to point out anything else useful I notice — not for folks to use for trading but more from an educational standpoint.
Included below are three questions and answers from the Q&A’s with Bill Fleckenstein.
50 Years Of Market Watching
Question: In over 50 years of watching the financial markets defy logic I have never seen it as bad in ALL markets as it is currently!!! the FOOLS are just begging to have their heads handed to them on a platter!!! GO GOLD!!
Answer from Fleck: “Central banks have broken the markets as we knew them, but that will change, and violently once it starts. Lunacy rules until it doesn’t, which will be sooner rather than later now, IMO.”
Miners Will Play Catch-Up
Question: The last few days have seen gold and silver up rather nicely with gold now back above $1300 but once again I am lower in total account value which is mostly mining companies. I sort of understand why PAAS is down a little but I don’t understand why most of the others are down. Could miner prices have lead a little quickly and this is catch up for the metal or is the market trying to tell us something.
Answer from Fleck: “Miners have lagged. That isn’t new. When they will play catch-up is the question.”
People Are Delusional
Question: Fleck, Do you find it funny how there are people on twitter who say gold trades off “real rates” and how it is due to get smacked? Now I am sure gold could get beat but this seems like a strange metric to measure gold’s value. Do you see a correlation there? Funny how bitcoin can go through the roof but gold has to trade with “real rates.”
Answer from Fleck: “People who say gold closely tracks real estate rates are delusional, IMO. Nominal rates don’t move that far on any given day, and true real rates even less so. I seriously doubt the inflation fluctuates all that much daily, but what matters most is longer range inflation expectations, IMO. That psychology matters to stocks, bonds, and gold.”
***To subscribe to Bill Fleckenstein’s fascinating Daily Thoughts CLICK HERE.
***To listen to Michael Belkin discuss what other market shocks and surprises to expect in 2018 as well as why gold and silver are set for a massive surge in the coming year CLICK HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Yes, China Plans To Send Gold Prices Dramatically Higher CLICK HERE.
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