Today 40 year veteran, Robert Fitzwilson, wrote the following piece exclusively for King World News. Fitzwilson, who is founder of The Portola Group, put together a fascinating piece which takes covers everything from Art Cashin, the 70s, and what the smart money is doing right now. Below is Fitzwilson’s piece.
“The great Art Cashin once said that he was counseled as a young man “not to plan for the end of the world as it is a one-off event”. As we try to divine our investment future, it is helpful to keep that sage advice in mind.
When I started my career in the early ‘70s, my singular goal was to graduate from a certain business school. It was the crowning achievement of my young life. Graduating in 1973, I took a job with an investment firm, eager to learn the business. Unfortunately, I parachuted right into one of the worst bear markets in history. It was so bad that we were forced to retreat to libraries to read books about how to invest.
The answer, though, was simple. Everything was going down. It did not matter what theory one employed. The Dow Jones had peaked in January of 1973 at 1067, and dropped like a stone to finally bottom out at 570 at the end of 1974. Needless to say, my eagerness and budding love of the business was greatly diminished.
I thought it was cruel that I had achieved the crowning achievement of my young life only to find out that the world was going to end. This was the age of the long gas lines. To even get gas, one had to have a friend who knew a friend. You then had to get in line, usually when nobody was looking….
Today acclaimed money manager Stephen Leeb told King World News that we are headed into massive inflation and a major spike in the gold price. Leeb, who is Chairman of Leeb Capital Management, also said that “Fortunes will be made by savvy investors in this sector.” Leeb stated, “We saw a mania in the gold shares at the end of the 70s and we are going to see one again this time around.”
Here is what Leeb had to say: “The economy is going to get worse. The price of resources has jumped over time and that has acted as a huge tax on consumers. But we are going to see another huge uptick in inflation going forward. This time the rise in prices will not be stopped by the Federal Reserve.”
Stephen Leeb continues:
“In fact, the inflation may even be fostered by the Fed. Brent crude is trading over $112 again, and gas at the pump is already rising. Bernanke today, I’m quoting a headline, ‘Bernanke says economic data may mask suffering of individuals.’ I agree with that, but I’m still surprised to hear a Fed Chairman saying that.
Another individual on the Fed Open Market Committee said, ‘Open-ended easing is needed for jobs.’ This is the type of commentary we are seeing, even with commodity prices starting to rise….
Welcome to Capital Account. JP Morgan said in a court filing that PFG’s subpoena of the bank may be overly burdensome. Will JP Morgan find a way to get out of it? It looks like they could be off the hook for accusations of silver manipulation. The Financial Times reported US regulators are increasingly likely to drop the four year investigation of silver manipulation, failing to find enough evidence. Bart Chilton, CFTC Commissioner, told a Motley Fool reporter that this FT report is premature and inaccurate. We find out what Chris Powell, co-founder and treasurer of the Gold Anti- Trust Action Committee, thinks.
Since 1998 the Gold Anti-Trust Action Committee, GATA, has been exposing, opposing, and litigating against collusion meant to control the price and supply of gold and other precious metals. GATA has collected and published dozens of documents showing Western treasury and central bank efforts at intervention in metals markets – interventions that occur both openly, as well as surreptitiously, preventing the proper functioning of a free market in gold. Chris Powell, co–founder and treasurer of GATA and Managing Editor of the Journal Inquirer, has come all the way to our DC studio to give us an update on where GATA is in its efforts.
Also, the Federal Government is auditing the gold stored at the New York Fed. Are those who have been calling for an audit for years satisfied, or does this miss the point? We talk to Chris Powell about what this audit accomplishes, and if it even begins to scratch the surface, no pun intended.
At least it’s not “Terrible”…at least not yet. The only thing of interest, so far, was when gold had the audacity to approach 1620. The banks quickly beat it back and have seemingly decided to take the rest of the day off. Let’s see if we can find something else to talk about.
First of all, the metals. We’ve had a couple of good days in a row and a nice little pop this morning. Apparently, that was all that would be allowed for now as gold was suddenly pressing up against 1620. There would appear to be quite a few stops between 1620 and the top of the range so The Cartel appears intent upon keeping a lid on things here. Silver is facing a similar issue. Having rallied over $1 from the Friday lows, it is now back into the very center of its 3-month range. It needs a propellant to shove it through 28.40 and on towards 29 and 30. Let’s hope we see some propellant soon.
With global stock markets trading higher, today legendary value investor Jean-Marie Eveillard, who oversees $50 billion, told KWN, “In a way one should not confuse fluctuations in financial markets or commodity markets with the end of the world. However, I think there continues to be considerable hope on the part of many investors that the Neo-Keynesian remedies which have been in place will result in a sustainable economic recovery.”
Jean-Marie Eveillard continues:
“There does have to be the realization that the hope of an economic recovery in the Western world will end up being a delusion. Investors and authorities who believe there will be a recovery are deluding themselves. But hey, hope springs eternal.
There is the continued stimulus being provided by the Federal Reserve, and of course some of that newly printed money ends up in the equity markets….
Today acclaimed commodity trader Dan Norcini told KWN, “One spark for gold may be at some point in August we begin to have rumors about what is going to happen at the Jackson Hole meeting. The first round of QE was announced during that Jackson Hole Summit in late 2008. So the upcoming meeting may wind up being very significant when it comes to which direction central planners are going to take.”
Dan Norcini continues:
“You may very well get a lift in gold based on the type of monetary response that may come out of Jackson Hole. The other situation which could escalate and have a huge impact in the key markets, particularly crude oil and gold, is the disintegration that is taking place in Syria.
If the war begins to engulf a broader scope of the Middle-East, bringing Israel and Iran into conflict, that powder keg could create an explosion higher in the price of both crude oil and gold….
Breakaway Consciousness 