Bill Fleckenstein: Hold Tight To Your Gold

Tyler Durden's picture

Submitted by Adam Taggart of Peak Prosperity,

The bond market is an accident waiting to happen.


When the bond market finally does crack, it is going to be one epic nightmare that is going to make 2008 and 2009 seem like a picnic. It will be a different kind of a crisis; but it will be an enormous crisis. These people that are bullish about stocks and bonds and the bond market, they do not understand anything.


We will hit a moment in time where there will be a rapid acceleration of the perception that people are being cheated via inflation by these money-printing policies. Why Americans seem to think there is no inflation just because the CPI says so, when their checkbooks every day ought to tell them there is, I cannot explain that. But there will be a change in psychology, and there will be a massive stampede into gold here and everywhere else around the world, because it is the only way you can protect yourself against these policies.

Pity the wise money manager these days. Our juiced-up financial markets, force-fed liquidity by the Fed the other major world central banks, are pushing asset prices far beyond what the fundamentals merit.

If you see this reckless central planning behavior for what it is - a deluded attempt to avoid reality for as long as possible - your options are limited if you take your fiduciary duty to your clients seriously. 

Bill Fleckenstein of Fleckenstein Capital has a difficult time seeing other assets to own besides the precious metals. There are confidence bubbles in stocks, bonds and the fiat currencies that will break - not may, but will -  and when they do, he sees no safe harbor for investment capital save gold:

If you saw the stock bubble coming in the late 1990s, why did you see that? Because you could see what the Fed was doing and the response people were having and the misallocation of capital and all the problems that that was going to lead to. If you saw that coming, you could not buy stocks. Your only real choice was to do nothing or short stocks. Shorting stocks is tricky, but those were the responses.


Fast forward to 2008; if you saw an even worse and more problematic real estate bubble, again, you could buy stocks or you could short them. You could not buy real estate if it was difficult to short list it. What were the proper responses?


Well, in the interim of those two, you also could have the response to buy gold, because we knew what the central banks’ response was going to be.


Now here we are today. If you understood those problems, you cannot buy stocks, because they are only up because of money printing. You cannot really short them, because it is so hard to fight that money printing.


The financial world has never existed like it does today. Where the Bank of Japan and the Fed are printing the enormous amounts of money that they are, and so is the Swiss National Bank, then let us not forget, there are dollar pegs all over the planet.


Whether it is in Asia or South America. So there are lots of places where they are also stimulating, printing money. So we have never been here before. There is no chance they are going to get the genie back in the bottle.


Maybe you can short stocks now because they are about to crash; I do not know. You cannot really short the bond market yet. But you ought to be able to buy gold. These policies will continue until the bond market croaks. In the interim, you ought to be able to make money in gold.


Now the gold market has been under pressure  for like 18 months, and we had a huge break off the top in September of 2011 when Bernanke did not do QE2 when they thought he would. Now we just had an immense crack after having had, for a year and a half, central banks go hog wild. I cannot believe that there is not going to be an enormous rally, prospectively, in the gold market, once it stabilizes and starts flying higher. It is going to go one hell of a lot higher, I think.


I just do not know whether we have a train wreck in the bond market first or somehow gold goes into orbit first. It is hard to play a step forward on this, but what we do know is that we have never seen this before. It is guaranteed to shred the purchasing value of current currencies over time, and what exactly it takes to change psychology, I really cannot predict. We will just have to see what it is.

He sees the recent takedown in gold as engineered and short-lived, a tactic perpetrated in the paper markets while it still can be. But he sees a day soon where the physical bullion market will reassert itself as the primary driver of the price of gold and silver, and the corrupt manipulation suppressing PM prices finally is no longer possible.

In the interim, don't let the current battery in price shake you loose of your PM positions, as it's designed to do.

Click the play button below to listen to Chris' interview with Bill Fleckenstein (28m:26s):

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Croesus's picture

Don't worry, I'm holding plenty tight.


The Ponzi players guarantee an inevitable flight into Gold. The more they drop the price, the faster "The Real Gold" disappears.

"Vote with your Oz.'s" <- Each one you buy, is a vote against these turkeys.


strannick's picture

Zerohedge. All gold, all the time. Gotta love it.

Goldbugs, the new radicals. Buying one ounce of silver is worth $23 times any Occupy sit in.

Eric Sprott makes Che Guevera look like Uncle Remus

Supernova Born's picture

Commies and socialists hate gold/real money.

TwoShortPlanks's picture

I predicted yesterday that the Gold take-down was driven by Central Banks deciding to [progressively] close-off all Gold Leasing Contracts at maturity (no renewal). Therefore, the physical must be repaid by the BBs, to the CBs....but from where? I believe this intent was given by the CBs to the BBs about 3-4 weeks ago.

You think the squeeze is tight haven't seen anything yet. Try to imagine a Gold Market where Central Banks are scrambling to repatriate their Leased Gold as well as a Retail Market hell-bend on buying won't happen...THEN, try to cope with the prospect of the general public - fuelled by MSM - getting into the market.

China's dramatic buying increase tells me that the cliff hidden in the horizon is now under the horizon and is clearly visible. Last one to the bridge is a rotten egg!

Gold: 1 gram, per year, per man, per-haps!

TwoShortPlanks's picture

This is what panic smells (looks) like.

This is Goldman Sachs in the act of market manipulation via MSM, to pull down the Gold price in order to shake the tree and free-up some physical (unallocated), so that they may buy that physical and repatriate the Central Bank Leased Gold.

Unfortunately for Goldman, fortunately for stackers, they must do this over-and-over again, as they more than likely must unwind hundreds if not thousands of Tons of paper without readily available underlying physical supply.

Good luck with that too Dimon...coz I can hear the creaking of the rope already!

TwoShortPlanks's picture


"A person that I know with significant deposits in one of the primary Swiss banks, in allocated gold, wanted to take out his gold and was just refused on the basis of directives from the central bank....They told him the amount was in excess of 200,000 Swiss francs and the central bank had instructed them not to do it because it has to do with anti-terrorism and anti-money laundering precautions"

This is THE trigger I've been waiting for.

Central Bank Orders = Bank For International Settlement Orders = United Nations/IMF/World Bank Orders = Gold Heist Cyprus Style.

If this is legit.....Get. The. Fuck. Out. Now!

Croesus's picture

@ TwoShortPlanks:


Very good insights in your post from yesterday. (Recommended reading for Gold Bugs, if you haven't seen it yet!)

Last one to the bridge isn't going to get a chance to cross it. The edge of the cliff is definitely in sight.

I do have an unresolved question about the recent developments in Gold:

Was the takedown in Gold a bold gambit on the part of the banksters (drop the price, hoping to scare the weaker-hands out of their positions?), OR Was the takedown in the Gold price done to deliberately cause a global flight into physical?

The Future Market for Physical Gold = All of the passengers on the Titanic, trying to pile into 1 lifeboat, all at once.


TwoShortPlanks's picture

@ Croesus...Cheers!

Yes, the door is closing and once it's closed only one at a time can fit through the window...big line-ups to come!

To answer your question; I can't say for sure. I just believe all the pieces fit together much better if the Take-Down was in response to the Central Banks demand for repatriation of Leased Gold. This can be either at maturity or it may be written in the Lease Contract that the CB has the option to call the physical back at any time, with notice. THAT, would explain the narrow time-line Goldman was playing with.

I believe Goldman needed to scare-out physical. I also believe they had a helping hand from within Merc Exchanges, as there was a lot of Unallocated Gold movement prior to the Take-Down. Levels of desparation are always proportional to levels of fear.

I cannot [now] envisage a case where a deliberate Take-Down was perfrmed in order to create a Run into physical....why would Goldman do that? That's not in the best interests of the CBs, the BB, the Markets, or even the Gov.

I smell desperation in Goldmans' highly visable actions and words to the MSM, and the only thing Goldman and JPM fear would be the Central Banks.

If I'm correct in the CBs stance on Leased Gold contracts, then the physical squeeze will now be from above and below (CB & Retail).

strannick's picture

The bond crackup of 2013 is going to make 2008 look like 2007.

Bond debt of bankrupt governments, or gold suppressed by corrupt banks. Pretty simple.

StychoKiller's picture

All the bit-players around the World might have drained around 20 tonnes of Au this go-round, the Trillion-$ question is how much Au does China have AND precisely WHEN they gonna announce that the RMB is knocking the $ out of reserve status?

Croesus's picture

@ TwoShortPlanks:

On one level, it makes absolutely no sense for anyone connected to banking to "smash PM prices, with the intention of causing a flight into physical". However, it wouldn't be the first time "someone set fire to their own home, in order to collect on the insurance money".

I look at the derivatives mess that's clogging up their books. There's no way to clear it, so why not:

a) Kill the bank

b) Bail-in the Depositors

c) Use depositor money + good bank assets, as new bank capital.





DosZap's picture


So much for GUARANTEED ALLOCATED PM accounts.If these guys screwed him, imagine what the  smaller schumcks will do.We already know 99% of all ETF's will never deliver phyz, they all have a "fine" print cluause that allows them to settle in cash.

If you don't hold it, you don't own it.

angel_of_joy's picture

Commies and socialists hate gold/real money.

Commies, socialists... and morons !

BC6's picture

Huh? Where have u been, there was a bombing in Boston FYI.

Charles Nelson Reilly's picture

I don't think you listened to the podcast, it was Bill Fleckenstein not Sprott. Do recommend I liquidate my stack and buy 30 year treasury notes? You seem to have it all figured out.

San Diego Gold Bug's picture

It is always easy to spot the poor guys on this site............Strannick............

Bay of Pigs's picture

I have no idea why people are junking him. He's huge gold and silverbug.

akak's picture

Strannick and I had a long-running thread in the Kitco gulag of a forum mocking Jon Nadler, turning his anti-gold "daily reports" upside-down into pro-gold "daily retorts".  It was a hoot!  (Until I got banned for being too outspokenly anti-Nadler).

Strannick is a good guy.

JOYFUL's picture

"banned on Kitco"...

badge of honor.

Phuck yu...Yknot2K!

duo's picture

Smart people said Enron, Worldcom, and Lucent were great investments.  They are all at 0 now.

JackT's picture

Until tomorrow and then only for a short time.

San Diego Gold Bug's picture

9,000 silver Eagels in stock at as of close of business today.

Godisanhftbot's picture

 All gone now.  ZH readers bought it all.

DJ Happy Ending's picture

Bill has always had good insights but his timing is horrible, especially with the dot com bubble.

The time Joe Battapaglia made his eyes well up and almost cry on CNBC after getting his ass handed to him wasn't endearing either.

msmith9962's picture

What about using TMV.  Any opinions on owning that to short the bond martket?

zorba THE GREEK's picture

If I hold it any tighter it will melt in my hand.

MFLTucson's picture

Look at the thin after hour’s market now, the criminals are at it again with the paper gold fraud and deceit!  Gold down when there is none to buy! lol!  These people suck!

fonzannoon's picture

Dude get over it. It's falling apart and they know it.

CClarity's picture

I think gold will be what sets off the great inverted pyramid of derivatives into the cascading calamity of collapse. Signs showing up now with divergence between paper and metal gold. Gold will be where the best signal wobbles forth first. Then stand back and watch CDSs, fiats,, electronic bank ledgers and derivatives of almost every ilk simply vaporize!

disabledvet's picture

Bill you need a haircut. Well...unless you've already gotten one of course. natural gas is up over 100% in just over a year. there's no problem making money in the commodity with everything else it's just a question of "buy low sell high." again you will never hear me say "start shorting." First Solar stands out as a good old fashioned "rip you short face off trade." Apparently so is Netflix. GE has gotten clocked on its earnings news...but this is after a solid pop on a massive asset sale with Comcast. Obviously i feel like i've missed out on a major rally since January...still haven't done a "reverse triple lindy with a full twist from the stationary board" but i'm really not happy as a "long everything" who was a raging bull in this space but a few months ago. we shall see of course but my personal view is that there is nothing standing in the way of what's left of the US and Japanese based banks, the East Asian Sovereign Wealth funds and "the usual assortment of millionaires and billionaires" from pushing this market...and a recovery...forward. if i had invested in my "zero recovery in real estate" thesis i'd be dead right now. same goes for my disdain for high yield. even zero yield is now exerting "the squeeze" and with little to no inflation, a dollar that bottomed almost a year ago, serious deflation in the materials space and a continued flood of investment dollars into the USA and i think you have the makings of an albeit "long hard slog" and anemic but still a recovery. it will be interesting to see of Chairman Bernanke is reappointed. My personal view is that he should's nothing short of miraculous that US based borrowing rates are as low as they are...although my personal view is that this is as much driven by events (Arab Revolt, Fukushima, EU disintermediation) as anything the Fed is in fact doing. Indeed i think a good argument can be made that what the Fed is doing is in fact a Treasury function...although it has obviously been far from market unfriendly. not saying "don't keep stacking" of course. it's just my view that "the bad guys" are stacking TONS of gold right now...not just a "few ounces here, few ounces there." among many other assets of course....

Croesus's picture

@ MFL Tucson:


Don't let 'them taking the price down' get you down! All it means is that physical disappears at an even faster rate. They are checkmated into a corner now.

The Fonz...before shark jump's picture

Dtc should chill Gld and Slv etf trading because of fraud...

DJ Happy Ending's picture

I thought gold traded nearly 24x7 and there is no concept of after-hours, especially with globex?

Urban Redneck's picture

Who watches channel 77 at 2am?

And to actually get to 24hrs x 5 days a week you need to go an off-off-market exchange (channel 583 on your digital box)

And if you really want 24x 7 you need the whole package of basic, digital, satellite plus an antique teletype and two cans connected by piece of string...


Lost Wages's picture

"Hold tight to your gold." I clutch all my valuables against my chest 24/7, while rocking back & forth, waiting for armageddon.

New_Meat's picture

does your "clutching" result in a "happy ending?"

Inquiring minds wish to know!!!

- Ned

{actually, none of us around these here parts gives a particular fuck what you do}

jimmytorpedo's picture

I alternate the rocking with some pacing and mumbling.

Abi Normal's picture

At least you are upright and rocking, I am in a fetal position sucking my thumbs!

MsCreant's picture


There you can relax now.

Armageddon is over wrought. Nature creates, sustains, and destroys. Compost fetilizes the soil so that the new seeds can grow in fresh nutrition. The system is holding back it's poo and needs to take a big dump. It is hurting the rest of the system until it does so. 

Black hole sun, won't you come, and wash away the rein? Or is that reign?

perelmanfan's picture

I've never heard one person provide an explanation of how QE can stop without destroying the economy - yet if it continues, it will also destroy the economy. The difference - ending QE causes destruction immediately and makes fixing blame simple. Continued QE pushes the reckoning into the indefinite future - a time when, each politician believers, I'll be long gone. So they choose option 2, as they have dozens, hundreds of times throughout history.

Poor Grogman's picture

Proessor Fekete comes close with his missive urging a return to the gold standard and opening the mint/s to gold and silver.

Basically he is saying that to prevent total collapse gold and silver must be "bought out of hiding" and mobilized as money once more, to do this he says the mints should be opened for private gold to be "coined" with only some seigniorage charged.

The next step would be to change/scrap legal tender laws and thus allow economic freedom to flourish once again.

This of course is about as likely as rocking horse shit, but worth mentioning anyhow.

Magnum's picture

Relative to other commentators, Flecks doesn't do a lot of public interviews but when he does it's spot on correct and always timely.