Bill Fleckenstein - “I don’t believe the gold bull market has ended"


The gold price climbed 2.4% Wednesday morning to $1,832 per ounce on the back of expectations that the weakening economy would prompt the Federal Reserve to initiate more monetary stimulus. After trading as low as $1,783 early Tuesday, the price of gold soared following a CNBC interview with Chicago Fed President Charles Evans. The dovish voting member of the Federal Open Market Committee told CNBC’s Steve Liesman, “the data has been soft” and noted that he “would favor more accommodation.”

Commenting on the recent correction in the gold price – which sent the yellow metal over 10% off its $1,913 per ounce record high – Bill Fleckenstein wrote in his weekly MSN column that “I don’t believe the gold bull market has ended…Having said all that, I would note that the gold market was due for a correction at some point, and it is now getting it. I say, let’s get it over with to clear out the hot money.”

Fleckenstein went on to discuss Ben Bernanke’s Jackson Hole speech and the implications it may have for the gold price. “The much-hyped Bernanke speech at Jackson Hole on Friday was essentially a nonevent. Basically, he said, ‘trust me’ while dangling a carrot by noting that the Fed still has tools available. He also said the September meeting would be expanded to two days so the Fed could think about how it might want to use those tools.”

As for the prospects of a third round of quantitative easing, Fleckenstein stated that “I don’t see how Bernanke is going to be able to hold off until Sept. 20 to start QE3, given how poor the economic fundamentals are here and how even more dreadful they are in Europe.”

Despite the fact that U.S. stock markets rallied following Bernanke’s speech and continued to push higher on Monday, Fleckenstein reiterated his preference for investments tied to the gold price – particularly gold stocks – versus the broader equity markets.

Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also wai...
Read more

For the gold price, two outcomes are possible.

Image
For the gold price, two outcomes are possible. First is a return to or near the April low ($1,277.40). Second is a drop to a lower low, $1,240 - $1,260. Yet a third possible outcome is that the June and December lows were not a double bottom and one further drop may come. I account that the least likely, and look for a low here by the end of the week, but I'm no more'n a nacheral born durnd fool from Tennessee, so what do I know?   You'd think that an institution charged with promoting the gold industry would produce reports that at least cast the best light on gold's prospects. You'd think wrong, if you're thinking about the World Gold Council. They've been negative on gold for, oh, the last 14 years or so. Today they issued a report that contained a nugget about Chinese business using physical gold as collateral for bank credit ($40 bn worth) but they managed to tease a gloomy forecast even out of this inventive monetary use. That and bad ...
Read more

The price of gold advanced as high as $1,603.40 per ounc

Image
The gold price broke out to a new all-time high above $1,600 per ounce Monday morning, rising for the eleventh consecutive trading session. The price of gold advanced as high as $1,603.40 per ounce before backing off to trade just the $1,600 level. The yellow metal gained on the back of a surge in borrowing costs for Italy, the latest European nation to see its bond market come under heavy selling pressure. The lack of a deal to raise the $14.3 trillion debt ceiling also helped boost gold prices. The eleven-day rise in the gold price is the longest winning streak since January of 1980. The gold price delivered another noteworthy performance last week, climbing 3.2% on its way to a series of fresh record highs. With Monday’s advance, the gold price extended its monthly and year-to-date gains to 6.6% and 12.5%, respectively. Last week’s two-day Congressional testimony by Chairman Ben Bernanke on the economy and monetary policy revealed that the Fed remains open to the...
Read more