BENNETT: Michael, going into
BELKIN: Well, everything's starting to work, things that I've been looking for a long time. Now the financials are starting to sell off big time.
BELKIN: ...and I have bruises...
BENNETT: Don't we all?
BELKIN: Yeah, from thinking that QE wouldn't help the markets, but it looks like the global economy is so far deteriorated at this point that I'm sticking to my guns. I don't really think European QE is going to help. It certainly will not going to help the European banks which are in as much trouble as the US banks are at the moment.
BELKIN: Well that's the big question mark. There was a legal ruling saying that they could go ahead and do this. The Germans are not in favor of it, so they are kicking and screaming. It seems likely that they will allow the local country central banks to buy back their own debt. But, I mean, Dawn, the interest rates are already negative in government debt all across
So we're in this weird Alice in Wonderland world again where everything's turned upside down and I think that the
BENNETT: This past week, because of the
BELKIN: Okay, I've been, long on the dollar for a while, you know, holding my nose, everything's based on this forecasting model, and it keeps me, certainly not perfect. I wouldn't try to land a space shuttle if is not 99.99 percent, but I have sort of a long term upward forecast for the dollar but it's more against the Euro and against emerging market currencies, not so much against the Swiss Franc and Yen. But it's very strange, because at the same time I also have an upward forecast for gold. Usually those two things are usually exclusive, but...
BENNETT: ...but now gold and the US dollar are correlated, right?
BELKIN: Right. So the dollar rallying is actually a margin call on global markets. So money went out, and when there is de-leveraging, the dollar tends to rally and that's the environment I think we are in, in global markets, de-leveraging. Now, Yellen and her friends, tried to leverage up the system and they certainly accomplished that. Margin debt is completely over the roof. But now we're in an environment where if you borrowed money and you buy an asset, you are vulnerable. We recently saw that in the dollar and Swiss franc, but I think we'll see that in a lot of other things and usually that tends to be bullish overall for the dollar in a perverse way -- it's not like the U.S. is so great or anything, but it's just in a de-leveraging environment, the dollar tends to rally for a while.
And again, it's more, from my perspective it's more against the Mexican peso,
BENNET: How much upside do you see for gold mining and manufacturing stocks for 2015?
BELKIN: Well, when they go up 20, 30 percent in a week, you get an idea, I mean, a lot of the little ones are severely depressed and triples, quadruples over a period of a year or two, certainly not out of the question.
I'm not saying, go out and buy small cap junior mining. You know, individual gold mining stocks still have risk, I think for individual investors, something like GDX, which is an ETF or GDXJ which is a junior mining ETF. I think those have less risk and a double is certainly achievable, so just to get up to the 200-week average for instance is up 84 percent, and that's just to have a bounce in the downtrend for gold mining shares is almost up 100 percent, and I think that I could easily double that this year.
BENNETT: With recent weak market closes, there seems to have been some buying panic. That suggests trouble for stocks as a whole, so how can these mining and manufacturing stocks do well when the rest of the trend is negative?
BELKIN: Well, mining -- let me make it clear. Gold mining are the only shares. The other miners, like steel miners and things like that, are doing the Bataan Death March, they are the ones who are leading the market down. It's only gold stocks that are going up. So, that's the really nice thing about gold mining assets, is they're negatively correlated to the market. They're supposed to go up when the market goes down and they're certainly gone down while the markets have been going up for the last couple of years. They peaked in 2011. As to the weak market closes, we've had huge inflows for no reason, like the last move up in the market starting last year during the end of October, November and December. It was led by inflows into ETFs, stock market ETFs, not gold mining ETFs. So, we have ten – the last week of December, we had 24 billion inflows into ETFs and before that, it was like 5 billion, 8 billion, 12 billion, 15 billion, and 9 billion. So every week, they were having 5 to
BENNETT: We talked earlier about the Swiss detaching the franc from the peg they had to the Euro. A few FX brokers closed down, some hedge funds blew up, even
BELKIN: It's sort of like the cattle on the way to the slaughter house. They hear the cry and they start getting nervous. I make a joke out of it but...
BENNETT: ...but it's hard to hear, right?
BELKIN: The central banks have made us, made the individual investors into pawns on this chess board and that's exactly – I mean if you're an individual investor out there and you own stocks and you think there's nowhere else to put your money, you are a victim of central bank policy. You are a pawn being moved around. So, is this the Year of the Sheep or the year where the sheep wake up and smell the coffee? So, I think it's a shot across the bow of market psychology which has been – if you get into behavioral economics, it's herd behavior.
BENNETT: Isn't that herd thinking counting on the central bank to bail us out?
BELKIN: Absolutely. So, you can only get away with that until the economy really – the economic cycle begins to turn south and it's been turning south in spades for ages, right? So, what happened last week, the banks disappointed, the banks said we've missed our revenues, our trading was worse, blah, blah, blah. Everything was worse than expected. So, that's what's supposed to happen. The companies – earning expectations are too high, you get into a down cycle, the company started laying off people, missing revenue and earnings, and I think what's really vulnerable out there are tech companies. The last week, I don't think people realized this, but last week, all the names that I've been saying to short were down. NCR down 8 percent in a week. Apple down 5 percent,
BENNETT: Michael, thank you so much for being on.
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