With the Dow surging along with crude oil and gold and silver consolidating recent gains, what’s next for gold and the stock market may surprise you.
By Bill Fleckenstein President Of Fleckenstein Capital
March 28 (King World News) – The early going saw the market trade around unchanged, in a somewhat listless manner. However, around midmorning the indices quickly sprinted to a gain of about 0.5%, which is where they were with a couple of hours to go, when I had to leave…
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Despite the bravado of buying the dip created by the disappointment of the Obamacare repeal vote that didn’t happen, I still feel like the market has run out of gas, even though it doesn’t seem to want break for real just yet.
They Could Make It a Franchise
I feel like I’ve seen this movie many times, where I’ve been waiting for something to happen, whether it is for something to bottom or top out or a certain piece of news, and then it occurs, but you don’t get the response you want right away, which can lead to a lot of frustration (not to mention potentially red ink).
However, when a trend has been in place for as long as this one has (i.e., for the last eight years, as well as the recent several-month rampage), sometimes it is a little harder to turn the supertanker around, and it turns out it is a bit of a process. All that is a long way of saying that I continue to believe that the market has exhausted itself on the upside. What we don’t know is at what rate it will decline (or for that matter, whether I will be wrong and it will make a new high).
Of course, that is just a thesis of mine and thus far we don’t have a lot of corroborating evidence. Therefore, I haven’t done anything about it yet, although I believe that the unraveling of the “America will be made great again quickly and painlessly” thought bubble has been dented. That will create problems for other markets especially the dollar and could be (should be?) supportive of gold.
When Push Comes To Shove
On that subject, in today’s Ask Fleck there is a link to an article about how the various gold ETFs push around the gold miners. I think it will be of interest to most readers because I am constantly getting emails about how XYZ gold stock acted so horribly. Most of the gyrations are noise, but not all of them (e.g., the weak performance of New Gold leading up to the announcement of its problems). As the article notes, a lot of the wild action is a function of the various ETFs, as well as the volatility of the underlying instrument, i.e., gold itself. So I encourage everyone to read it, and thanks to the longtime reader who often sends in such useful information.
Away from stocks, green paper was flattish, oil rallied a percent, fixed income was ever so slightly higher, and the metals were fractionally higher as well.
Included below are four questions and answers from the Q&A’s with Bill Fleckenstein.
Bonus Q&A
Question: GG getting slapped around today supposedly on pair up with Barrick. I’m not seeing a good reason for the sell off do you? In other words, is this a buying opportunity?
Answer from Fleck: “It all depends if you were ready to buy it anyway, and what you think gold is going to do. The selloff on this news is crazy, IMO.”
Question: A closer look at gold miners ETFs and how the levered funds are in control… Under the Hood: What’s in Your Index?
Answer from Fleck: “Thanks. Everyone needs to read this and then calm down the next time miners get squirrely.”
Question: I was reminded to follow Fred Hickey’s advice to take long walks during Bubbles when I read the latest WSJ article pumping Elon Musk’s latest endeavor, embedding semi-conductor chips in humans to read thoughts. 😉 Bill, this is truly crazy talk! Is it possible that social media has such an influence on the way people think about investments that it leads to bigger bubbles than than the financial bubbles of the print media age? Regards.
Answer from Fleck: “Could be, but let’s not forget about $10 trillion globally of QE, which has never been seen before.”
Question: Hi Fleck. If gold breaks through the 200 day moving average, how probable is it that the miners will perform as well as they did last year during the April through July time period?
Answer from Fleck: “I have no real opinion on that. They should do well, but how well I can’t say unless I know how high gold will go.”
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