Today one of the greats said it may finally be time for gold and silver to move higher.
Waiting On The FOMC
By Bill Fleckenstein President Of Fleckenstein Capital
September 25 (King World News) – The market was quiet and just slightly higher through midday, with nothing remarkable worth reporting, other than the undertow was at work again in the chip sector…
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In the afternoon, little happened and when I had to leave, with an hour to go, the indices were mixed and not far from unchanged. Please check the box scores to see if anything happened in the last hour.
Away from stocks, oil was flat, green paper was mixed, while fixed income was weaker again, with the 10-year now yielding approximately 3.1%. The metals were higher, led by silver, which gained 1.5% to gold’s fractional gain.
Rate and See
One would think that tomorrow’s rate hike should have been discounted by the metals complex, which seems to be the only place higher rates matter, even though, historically, they have not been negative for gold. But if we have constructive market action in the wake of the meeting, it might finally be time for the metals complex to move higher.
On the mining front, for the second day in a row the combined entity of Barrick and Randgold traded higher, which I think is a positive development.
Included below is one question and answer from the Q&A’s with Bill Fleckenstein.
“Let Them Eat Cake”
Question: Last week someone wrote in about how kicking the can down the road might lead to social unrest. I see it coming. At the turn of the century in spite of poor policies we were not that bad off but the desire of the FED to avoid even a mild recession (and I must add Carter does not get credit for putting Volcker in charge of the FED-imagine if he had put easy Al in charge when inflation was like it was) not only destroyed a generation of savers,but has just made every issue worse and destroyed the middle class.
I know so many who worked hard their whole lives who will never retire. A mild recession after the tech bubble and 9-11 (and I think lowering rates was a political move because Al raised rates in ’92 and got blamed in part for Bush 1 losing) once rates went under 3% it drove yield chasing and among other policies led to the meltdown of ’08 and that bail out led to this giant bubble and class division between the ultra rich and everyone else.
The sad truth is this whole globalization thing (and much like the industrial age moving folks from farms to cities was not going to be an easy transition) has been made worse by policy (coal jobs have been falling since the ’20’s for Gods sake), but we are going from the industrial age to the technology age.
I still think the math of a consumer economy that keeps reducing jobs and paying people less in terms of real dollars is doomed to not end well-but the FED policy to avoid short term pain at any cost has just made it worse. You can only say “Let them eat cake” so many times before it becomes violent. I am glad I am old enough that even though my life’s work has not turned out as planned I may not live to see the end result of this mess that has been created by not dealing with the real issues. It was always going to be hard but it did not have to be like this.
Answer from Fleck: “The Fed has stealthily (and not so stealthily) ruined so many lives, it is surprising that so few seem to understand who the real menace is.”
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