Bill Fleckenstein on the metals today.
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"Another Slice of Silver, Please"
"Away from stocks, fixed income was a touch lower. The currencies were higher, after being lower for most of the day. Precious metals were heavy early on, with silver down another 2% and gold down about 1%. Silver managed to turn green, closing up 1%. Gold ended 0.5% lower. I added fairly aggressively to my silver position today and will probably buy more tomorrow if it looks okay. I'll be the first to admit that silver can be a bit of a wild animal, so folks should take that into their risk-management considerations.
My conviction on the precious metals stems from my belief that the dollar is going to be in trouble, the economy is going to be in trouble, that we are going to experience inflation problems, and that we will ultimately run the risk of a train-wreck scenario, both in the economy and stock market. I believe that all those things will be bullish for the precious metals."
"Rising Rates Don't Shut Metallic Gates"
"Up to this point, the metals have done well, with folks buying them as a currency play, a China play, or just because they were going up. I think we are now seeing a shakeout of the weak holders, who owned the precious metals for some of the reasons I suggested, but none of the reasons that I do. In other prejudiced words, the guys who owned metals for the "wrong reasons" are selling to those buying for the "right reasons," if that isn't too arrogant-sounding."
"A lot of people worry about rising rates being bad for metals, about the dollar going up being bad for metals, or the stock market going down being bad for metals, because that's what happened in 1987. I don't share those concerns. I see 1987 as a pimple or rounding error, compared to where we're headed now."
"I would especially like to make the point that rising rates in and of themselves do not make metals go down. A lot depends on why rates are rising. Rates can rise because folks think inflation is a problem, or the dollar's decline is a problem, or a Fed run amok is a problem. But though these factors can send rates higher, they will ultimately push up metals prices. A final caveat: Folks should recognize that I could be wrong, and make their own decisions on these subjects -- not just copy mine."
Edit: I should include his final note too.
"This litany of concerns is why I own foreign currencies and precious metals, and am not willing to own stocks. We have a serious amount of trouble ahead. Trying to speculate our way to prosperity has only exacerbated the situation." |
