Famed Short Seller Says Gold Is Now In The Early Stages Of A Bull Market

On the heels of a major rally in the gold market, today a famed short seller said gold is now in the early stages of a bull market.

Overnight markets were all higher, as higher prices in this bear market rally have helped create more of the same. However, despite seeing our futures trading to the upside overnight, by midday the indices were slightly lower, led by the Nasdaq, which dropped 0.75%. That weakness continued and with a couple of hours to go, when I had to leave, the Nasdaq was 1% lower, versus about o.5% losses for the other two major indices…

Fleckenstein continues: There was negative news out today, but I don’t really think that triggered the decline, because when the news hit it was more or less ignored. By that I’m not referring so much to the decline in the index of leading economic indicators, which fell 0.2%, because that was exactly what was expected. Rather, Walmart’s negative news, which saw the stock price fall 5%, is an indication of the real forces facing corporate America and the economy.

Did Anyone Save Room for Dessert?
On the flipside, a pie-in-the-sky dead fish report (by Morgan Stanley) suggesting that IBM was undergoing a magical transformation managed to see that company’s stock price explode for about $7 — which is just another example of people’s willingness to suspend disbelief.

As an aside, I have a friend who runs a biotech short fund who told me we are back to the situation where single-product companies that saw their clinical trials fail are seeing their stock prices leap higher.

It has often been said that bear market rallies look better than the real thing, so those stories are just part and parcel of the fact that when stocks with decent short interest don’t go down when you think they ought to, or seem to respond too well to something they shouldn’t, the buying sometimes feeds on itself.

Away from stocks, green paper was mixed, oil was flattish, fixed income was higher, and the precious metals rallied about 2% higher when I left (please check the box scores to see where they closed).

– Richard Russell Says Americans Are Scared To Death As He Declares What Will Confirm New Bull Market In Gold Golden Calf Sighted at Wall and Broad

In the mining sector, Pan American, Barrick Gold, Newmont, and New Gold all reported this morning (or last night) and for the most part the results were in line. That said, there were enough warts to justify selling them if people had a mind to do so, which they have done virtually every time a miner has reported over the last three years. However, with the exception of Newmont these four did not in fact spend much time in negative territory, and even Newmont managed to rally smartly as the day wore on. Combined with the other data I noted yesterday about gold, this continues to suggest that we are in the very early stages of a new bull market.

On the subject of PAAS, yesterday I noticed the founder and chairman, Ross Beaty, recently purchased 200,000 shares. When I asked him about it, he noted that he now has more shares than when he founded the company in 1994! That is extremely unusual in the mining sector, and for those who don’t know, Ross is a real moneymaker when it comes to investing in mining, and not by being a promoter, which is the case with so many others in the industry.

King World News – Bill Fleckenstein – The Longer A Mania Goes, The Worse Off Everyone Will Be When It Ends – The Aftermath Of This Is Going To Be Extremely Brutal, Plus A Bonus Q&A

Included below are three questions and answers from today’s Q&A with Bill Fleckenstein.

Bonus Q&A

Question: Hey Bill, any idea why the S&P 500 has gapped up a couple days in a row? Is this the market refusing to believe that we’ve rolled over?

Answer from Fleck: “Bear market rallies are just wild…”

Question: Central bankers and their supporters talk of banning cash, starting with the larger denomination bills. It’s suggested elimination of physical money is necessary to enable NIRP by removing the option of going to cash. Can business and the transactions of every day life function without physical money (even ignoring the liberty and Constitutional questions)? If the central bankers succeed in eliminating physical cash, can the concept be successfully extended to gold? Thanks in advance.

Answer from Fleck: “They can’t eliminate cash. It won’t work.”

Question: The phrase “what we need to fight is demand deficiency” uttered by an analyst in the Rap the other day caught my eye. Do you think the world’s largest economies – led by Japan, Europe, and to a lesser extent the US – are undergoing demographic shifts that underpin this “demand deficiency” ? Old people don’t buy as much “stuff they don’t need, with money they don’t have, to impress people they don’t like” to borrow another phrase from previous Raps.

In addition, “millenials” or whatever they are called in the US, seem less interested in buying cars, TVs etc. None of my three 20-something kids owns a car or owns a home. Yes, they have iphones and computers, but net-net they have even less “stuff” than I did at their age. Even people at Ikea are talking about “peak stuff”. IKEA Executive On Why The West Has Hit ‘Peak Stuff’ Just a couple more reasons monetary policy won’t fix the issue, if demography and cultural shifts are the root cause.

Answer from Fleck: “The economy has been broken by debt and 20 years of insane monetary policy, that fact is as much to do with demand weakness as those others that you note…”

By Bill Fleckenstein President Of Fleckenstein Capital
February 18 (King World News)