Monday, December 21, 2015

Interview with Bloomberg News

Bloomberg News: What are you making of the Fed rate hike and the details of the statement?

JIM: As you know the market interest rates were already going up and the Fed once again just follows the markets. The Fed is just made up of bureaucrats and academics. They don’t know very much. Interest rates are going up. If you follow the Fed, and I guess you have to, the first interest rise from the Fed doesn’t mean very much. The third one is where you have to start worrying. If the Fed raises rates three or four times, then it is usually all over for the stock market. So just keep watching, be worried and be prepared.

Bloomberg News: So we already know that there is going to be about 3-4 rate hikes including this one. What is your prognosis for the global markets if you were to look at the new calendar year 2016?

JIM: I don’t trust the government officials as much as you do. I know they said that. Let us see if it actually happens. If the third interest rate hike comes from the central bank, I will certainly be selling shares worldwide. I have already sold junk bonds in America. I will sell a lot of bond short if that happens.

Bloomberg News: One of the direct correlations of what’s been happening around the news of a Fed lift-off is the fall in commodity prices along with the global slowdown. Talking about commodities—oil and metals—what is the sense that you are getting? How much of a downside do you see?

JIM: Well, I have hedged my gold and silver holdings. I expect gold to go under $1,000 an ounce. What does that mean for silver—$12 or $10 an ounce—I haven’t figured it out. But certainly under a $1,000 for gold at which point I hope I am smart enough to take my hedges off and buy a lot of gold—whether its $950 or $900, I don’t know. Base metals seem to be making a complicated bottom as do oil prices. They have been beaten down. There’s a lot of bad news. They don’t collapse anymore, which usually means we are in the process of making a complicated bottom that I suspect will happen the final bottom in 2016 if it hasn’t already happened.