Today one of the greats in the business said the metals complex is setting up for a big trade to the upside.
By Bill Fleckenstein President Of Fleckenstein Capital
December 12 (King World News) – Markets were modestly higher with an hour to go (when I had to leave), as the Dow led the charge. Away from stocks, green paper was the flavor of the day, presumably over excitement regarding the planned Fed rate hike tomorrow. Oil declined 1.5%, fixed income was heavier, and the metals were about flat after having been lower once again.,,
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What Would You Trade for Relief?
I must say that obviously the last few months have been pretty tortuous for metals bulls, but we are potentially fast approaching a moment for at least a decent upside trade. Sentiment is about as negative as it can get, as measured by the DSI (meanwhile, the level of despair seems unusually high), the declines have been extremely lopsided in terms of the number of days, as of last Friday’s CFTC data the commercial positioning had swung dramatically (and I would guess it has again), and of course we will have the news of the rate hike (which really doesn’t make much difference in the scheme of things) out of the way.
Thus, other than the fact that it is the end of year, which provides its own set of crosscurrents, I would say that the metals complex is setting up for a big trade to the upside, at a minimum. Of course, the real payday for the metals will be after the bubble bursts and the central banks are seen to be the problems that they are, but that is down the road some.
Included below are two questions and answers from the Q&A’s with Bill Fleckenstein.
Lots Of Silliness
Question: Hi Bill, thought I’d share this: My nephew (AF Lt Col) calls me the other day to borrow $25K to buy a rack of servers to mine bitcoin. They have to be housed somewhere–Houston is $3K/mo, Denver $2K/mo. He has all the stats on how many bitcoins he will mine per month, etc. I just told him I wouldn’t cash in any of my gold or silver to finance his new business.
Answer from Fleck: “Lots of silliness at work now.”
Buying The December Lows
Question: Buying gold stocks in December:
Dec 2013 low: +38% in 55 days
Dec 2014 low: +35% in 22 days
Dec 2015 low: +139% in 164 days
Dec 2016 low: +37% in 34 days
Answer from Fleck: “Almost, but I believe that data is buying at the December lows.”
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