One Pro On What He Is Doing With His Own Money After The Gold & Silver Smash
With the the price of crude oil tumbling nearly 4 percent and the euro gaining against the dollar, one pro discusses what he is doing with his own money after the gold & silver smash.
By Bill Fleckenstein President Of Fleckenstein Capital
November 29 (King World News) – Overnight bond markets were nearly all higher, and equity markets followed modestly in their wake. The action here for the stock market indices was to the upside, led by the Nasdaq, which tacked on 0.75% in the first couple of hours. I would imagine that had something to do with end-of-the-month tape painting, but who knows. After the initial surge, the market drifted sideways until about an hour to go, when I had to leave. Away from stocks, green paper was slightly weaker, oil lost 3%, fixed income was a touch higher, and the metals were mixed, with silver a little higher and gold a bit lower…
Nevertheless, it feels like the area of greatest certitude is the belief that the dollar will soar nearly indefinitely while the rationale (on the other hand) is somewhat spurious. I continue to read about repatriation, but there is plenty of data to suggest that much of what would be repatriated if companies were given the right tax incentives is already held in dollars in the first place. So repatriation per se will not necessarily make that much of a difference prospectively, especially since so many people have seemed to already have factored that in.
The Special FX Are Amazing
Another point that I see made quite a lot is that people around the world have borrowed in dollars and thus are short them. While that is true, the implication is that, for example, if $10 trillion has been borrowed, converted into some other currency, and spent on something, then that $10 trillion is now effectively $0. Far from it. Whatever currency it was turned into may have declined some, but only by a percentage. Said differently, the amount of money that these folks are “offside” and therefore stressed by is not nothing to them, but it is not necessarily the infinite wall of money that needs to be converted that people imagine.