Ben Bernanke, Please Call Your Office
Bill Fleckenstein

Overnight markets were weaker, especially in Europe, where most lost a percent or more, with the leader to the downside today being Switzerland, which was off by 3%. Over here, the bulls put on a brave face again in the early going, and the loss was about 0.5% for the Dow and S&P, with the Nasdaq doing a bit better. That was despite the fact that consumer spending was reported to have declined in June by 0.2% versus expectations of a small gain. That would be the first time consumer spending has declined since around July of 2009 - just another negative macro data point to fit the puzzle.

There was not much action in the early going, as the market appeared to be just marking time in anticipation of the Senate passing the debt ceiling legislation. Once that happened, the "good news" was sold and stocks started to slide again. It was a brutal, across-the-board rout, with the indices closing on the lows, losing almost 3%. Now that stocks are tanking, bulls will have a better chance to get QE3 sooner, a step in the process they seem to have overlooked a few weeks ago.

Away from stocks, the dollar was mixed, bonds were very strong, and oil lost 1%. The metals were in gear, with silver gaining 3.5% to gold's 2%. Unfortunately, gold stocks were kind of lame on the upside.

Last night, the Korean Central Bank disclosed that it had made a gold purchase for the first time in ten years, specifically, about 25 tonnes at a cost of roughly $1.5 billion. While that would be a pretty chunky investment for many entities, Korea is sitting on several hundred billion dollars and has the world's seventh-largest foreign exchange reserve, thus, the gold purchase is more of an odd lot.

It sort of makes one wonder, why buy only that much? If they intend to buy more, they are tipping their hand somewhat, and if they don't, what good is $1.5 billion worth of gold compared to all the "xeras" they are sitting on? On the other hand, perhaps they are just trying to let folks at home know that they get the joke and have begun exchanging their green paper for real money.

Bill Fleckenstein is president of Fleckenstein Capital, a money management firm based in Seattle. He writes a daily Market Rap column for his website, Fleckensteincapital.com, as well as the popular column Contrarian Chronicles for MSN Money.

Bill began writing a daily column on the Internet in 1996. Initially, the Market Rap was a daily recap of market events, with an added "Yes, but..." emphasis. "I quickly learned that the contrarian viewpoint was often misrepresented and under-reported. Since then, my daily column has always called it like I see it. I've tried to write the column in a way that even the novice investor can understand. I believe it's better to teach someone how to fish, rather than just give them an occasional fish."

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