Will millennials embrace gold? Plus surprising insider trades at gold mining companies.
By Bill Fleckenstein President Of Fleckenstein Capital
November 27 (King World News) – The stock market was a nonevent and about flat through midday after last week’s festivities, although beneath the surface there was a little bit of excitement, particularly in AMZN, which at one point was up another couple of percent before it gave up half its gains. Nothing happened in the afternoon, as the market closed about unchanged…
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Away from stocks, green paper was slightly higher after being quite a bit weaker on Friday, oil lost 2%, fixed income was up a couple of ticks, and the metals were mixed with gold adding 0.5% to silver’s fractional decline.
When Opportunity Knocks (From the Inside)?
The miners were sporadically a little bit better, but for the most part they continue to get no love at all, despite the fact that there has been respectably sized insider buying from various individuals at many different companies. I don’t believe I have ever seen this amount of repeated activity on the part of insiders. The closest episode I can recall for the miners was early 2016 before they blasted off, but what we’ve seen recently seems a bit more aggressive to me.
In addition, the margins for some of them are now about what they were when gold was several hundred dollars higher. Thus, the kind of money they could bring to the bottom line as gold prices increase would be quite substantial.
All year long the better companies have reported good news, yet the stock prices have gone nowhere (or declined), and insiders are buying. If this were any other group, they would already be on fire, but that is just the way things go in manias. In late 1999, value-oriented companies were dirt cheap even as the dot-com nonsense exploded higher on a regular basis, and today is a variation of that same theme.
This Won’t Hurt a Bit
Of course, nothing typifies the madness of the digital crowd and its belief in Santa Claus better than Bitcoin, which went wild over the weekend, trading up almost 20%, and knocking on the door of $10,000. So, despite my belief that it is worth virtually nothing, it continues to explode, in just another manifestation of the mania.
Included below are two questions and answers from the Q&A’s with Bill Fleckenstein.
No Exact Path
Question: Hi Bill, from today’s rap: “We must remember that the only reason the markets are where they are is because central banks have printed as much as they have.”
I get how central bank asset purchases have resulted in large excess reserves in the banking system. What I don’t understand is the transmission mechanism to higher stock prices. Much of the new “money” sits in excess reserves and has not multiplied via lending (relative to asset price increases). Can you quantify this relationship? Thank you.
Answer from Fleck: “There is no exact path, but easy money, setting rates too low, and even more QE cause assets to rise. It starts out by creating bids across the yield curve then migrates to stocks. The linkage is imprecise, but that is how it works.”
Millennials And Gold
Question: Hi Bill, do you foresee millennials eventually embracing gold, when the central banks do falter? Just based on what I see in that generation, gold runs somewhat counter to the pro-technology, anti hard asset, transient nature of people of that age. (All of this is, I suppose, why bitcoin is so popular with so many people in that generation). Is it possible for gold to rise again at this point if it isn’t embraced by people who are millennials (and those younger) given how they are becoming more and more important in the investing landscape as they get older and wealthier? Thanks as always.
Answer from Fleck: “I don’t really worry about what that demographic group may do or may not do, as that is not how to think about gold, IMO. Besides, collectively they don’t have that much capital in any case.”
***To subscribe to Bill Fleckenstein’s fascinating Daily Thoughts CLICK HERE.
***KWN has now released the powerful audio interview with London whistleblower and metals trader Andrew Maguire and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: One Has To Be In Complete Awe Of This Move CLICK HERE.
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