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Bill Fleckenstein Still Bullish Gold

Jan. 10, 2012 9:35 AM ETGDX, GDXJ, GLD, IAU, NUGT, NEM, GOLD, GFI, AEM, NG, RGLD1 Comment
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Noted hedge fund manager Bill Fleckenstein is one high profile investor that everyone should follow. Fleckenstein has made many good calls over the years, but there are two which were especially memorable. Firstly, Fleckenstein was short the market going into the 2008 crash. Secondly, Fleckenstein has been bullish on Gold for much of its rally to record levels. Fleckenstein closed his short only hedge fund at end of 2008 to open a fund that would pursue a more balanced approach for 2009. This decision ended up signaling the low for the stock market was near. 

What is Fleckenstein doing now?

Money Printing

"As I have said many times, central banks the world over mean to print however much money it takes to avoid anything remotely approaching a declining cost of living, with only the Europeans being unwilling to stand up and say that is exactly what their goal is. Thus, the long-term outcome is not in doubt, although the short-term twists and turns are, as always."

So for Europe, the saga continues. Will the eurozone crack up before the European Central Bank panics, or will the ECB panic first (even more than it already has)? We will just have to see, but in the end, all roads lead to money printing, debased currencies and inflation until the printing press is taken away.
" (MSN Money)

Click here to read the full piece.

Bullish Gold Miners

"Another way to value miners is to calculate what the gold in the ground sells for versus ingots above ground. For example, in the case of Newmont Mining (NEM) , its 100 million ounces would cost you $350 an ounce if you acquired the whole company. Adding the $550 per ounce that it costs to yank the gold out of the ground means that, at roughly $900 an ounce, the gold with the dirt still on it is a lot cheaper than coins or bars selling for around $1,700 an ounce.

To my mind, the change in behavior since July of the miners I own -- Newmont Mining, Yamana Gold (AUY)and Goldcorp (GG) -- shows that the shift toward expectations of higher gold prices has finally begun.

That is a psychological sea change. Analysts who have held their future price assumptions for gold prices in the $900 to $1,000 range have just started to bump them up. That can have a dramatic impact. In an Aug. 22 report, the gold stock analyst at Citicorp raised his long-term gold price assumption to $1,050 from $950 and over the next four years to an average of $1,437.50 from $1,156. As a consequence, he upped his target price for Newmont from $55 to $80 per share. That same report contained a table showing that with a long-term gold price assumption of $1,850, his target for Newmont would be $200.

I believe that the concept of a future with higher gold prices is an idea whose time has come." (MSN Money)

Click here for the full article

Investment Ideas

  • Buy Gold Miner ETFs (GDX) (GDXJ)
  • Buy Gold ETFs (GLD) (IAU)
  • Buy Leveraged Miners ETF (NUGT) (only for the shortest term traders because of issues with leveraged ETFs discussed here)
  • Buy Gold Miners (NEM) (ABX) (GG) (GFI) (AEM) (NG) (RGLD) (GOLD) (EGO)
  • Buy Silver. If Fleckenstein is right about "money printing" then silver has more upside than gold as discussed here.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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