Billion dollar fund manager David Tice says that the Federal Reserve’s ceaseless printing of dollars could cause gold to surge past $2,000 an ounce, while the Dow could fall below 5,000.
Tice, who manages the $1.1 billion Prudent Bear Mutual Funds from the Virgin Islands, told Bloomberg TV anchor Carol Massar yesterday that the time scale of his forecast will be determined by how quickly foreigners lose confidence in the dollar.
“Bernanke has essentially been known as, you know, possessing the printing press, etc. and, you know, it depends a lot on foreigners as far as how quickly they lose confidence in the dollar and what happens throughout the world as well,” Tice said.
“Our currency’s going to be diminished even though gold has been very, very volatile – down $250 just over a few months,” he added. “I think it’s going to head to $2,000 eventually and it will protect you. And I do think less equity investments make sense,” said Tice, advising that owning precious metals was a way of reducing equity exposure.
Warning that the pain was far from over, Tice said, “We think that we’re going to have to pay for the excesses of really the last five to 10 years of this excessive credit growth with a dramatic slowdown in the economy, dramatically lower markets. We’re still above 10,000. We think we’re going to, you know, fall below 5- or- 6,000 on the Dow and we think we’re going to have to readjust the U.S. economy towards less consumption – where we pay for goods with goods.”
Despite a recent SEC ban on the short selling of nearly 800 financial stocks, Tice advised that traders should still short the market, arguing that it’s a legitimate trading practice.
Cramer: Black Monday Could Have Been “Financial Terrorism” CNBC host compares crash to pre-9/11 short-selling of airline stocks as SEC enforces ban to fight “market manipulation”
CNBC host Jim Cramer says that financial terrorism could have been behind Monday’s stock market crash as part of a conspiracy to “bring down capitalism,” as the SEC this morning announced a ban on short-selling in an effort to fight market manipulation.
“Traditional people who are allegedly shorting are not….it could be financial terrorism, what a great way to take down America….maybe they want to find out who is doing this shorting like in 9/11, remember the airlines went down first and people thought it was Bin Laden,” said Cramer.
A record number of ‘put’ options, speculation that the stock of a company will fall, were placed on American and United Airlines in the days preceding 9/11. This despite a September 10th Reuters report headlined ‘Airline stocks set to fly.’
Between September 6 and 7, the Chicago Board Options Exchange saw purchases of 4,744 put options on United Airlines, but only 396 call options. On September 10, 4,516 put options on American Airlines were bought on the Chicago exchange, compared to only 748 calls.
However, independent investigators that looked into who benefited from advance knowledge of the terrorist attack found a trail not to Bin Laden, but to Alex Brown/Deutsche Bank – chaired up until 1997 by executive director of the CIA, Buzzy Krongard.
Cramer encouraged authorities to look at who was behind short selling stocks this week because the situation represented a “financial national emergency.”
“I think the FSA needs to find out….whether this is someone who wants to bring down capitalism,” added the host, noting that Hank Paulson himself was accused of helping to bring down capitalism when the government seized control of Fannie Mae.
“Obviously the financial terrorism thing for me has to be put on the table because the regular short sellers are not doing this, they’re not doing this,” stated Cramer.
The Securities and Exchange Commission announced this morning that investors would be temporarily prevented from making bets on stock declines on 799 financial stocks. The ban will remain in place for 10 days and could be extended for up to 30 days.
SEC Chairman Christopher Cox said, “The Commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets. The emergency order temporarily banning short selling of financial stocks will restore equilibrium to markets. This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury, and the Congress.”
Cramer disagreed with the move, stating, “To ban short selling is wrong, unless you had reason to believe that it was a force you would normally use physical terrorism that is using financial terrorism.”
Billion dollar fund manager David Tice says that the Federal Reserve’s ceaseless printing of dollars could cause gold to surge past $2,000 an ounce, while the Dow could fall below 5,000.
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