Richard Russell - Gold is in the Process of Building a Bottom

Richard Russell - Gold is in the Process of Building a Bottom

With gold and silver off of the recent lows and the US Dollar staying below key support at 78.50, the Godfather of newsletter writers Richard Russell asked this important question, “Will the dollar continue its fall, and will the Dollar Index break below its March 2008 record low of 72.165?”

Russell continues:

“A typical know-nothing article appeared in Saturday's Wall Street Journal. The title of the article was: "Is Gold's Golden Era Over?" The article was accompanied by a chart which shows gold matched with the sluggish Consumer Price Index (CPI). The inference is that since the CPI has hardly budged over the years and gold has surged, that gold is in a fairy-land world of its own.

Of course, we know that the CPI is just another phony government index, an index that fails to reflect the true path of price inflation. The WSJ article tells us, "The price of gold largely reflects sentiment rather than fundamental demand, which is one reason why gold kept rising the past ten years. But speculators already have cut their bullish bets on gold to the lowest level since 2009. Heavier selling, in turn, could beget still more selling."

This is the kind of utter nonsense we read in the media, week after week, month after month. Of course, ironically, the media is doing so-called "gold bugs" an enormous favor. The media has kept the US public out of, or afraid of, gold for years, thus holding back what otherwise might have been a panic by Americans to buy gold. In this way, the media has kept gold cheap, cheap enough so that the so-called gold bugs have been able to accumulate the yellow metal at bargain prices over the years.

The media today never asks why no fiat currency has lasted for long. In 1971 Nixon slammed down the gold window because the government feared that it was losing too much gold. Yet articles continue to appear in the US media, all suggesting that gold is a hyped-up relic of the past, and that even if you like gold, it is far too expensive at its current price.

Gold -- I believe that gold is now in the slow and often confusing process of building a bottom. April is now the active month for gold. The low for April gold on the sell-off was 1311.30. That should represent the extreme low for this consolidation. Sit with all your precious metal positions.

Ironically, the media seldom attacks the dollar or fiat currencies. The media never mentions that fact that most fiat currencies have died within 40 years of their original creation.

Yes, it's a strange, strange world we live in. And I expect the year 2011 will be a year when a great many questions will be answered. Stock market, the dollar, gold, interest rates -- we await your verdicts.

In the meantime, I believe the surest bet is as follows -- the US dollar will continue to lose purchasing power. All else will stem from that phenomenon.”

To subscribe to Richard Russell’s Dow Theory Letters CLICK HERE.

For all King World News readers and listeners globally, I hope you understand the importance of what Russell is discussing here. Should the US dollar continue its decline and take out the lows, you will see a move into gold and silver and a corresponding price rise that will be absolutely shocking to the investment world.

This would result in a panic into hard assets. So far this bull market has been very orderly, this would be a gold and silver market that would be disorderly to the upside, and one that would utterly destroy the gold and silver bears.

Eric King

KingWorldNews.com

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Richard Russell - Gold is the Ultimate Survival Mechanism

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/12_Richard_Russell_-_Gold_is_the_Ultimate_Survival_Mechanism.html

With gold still consolidating gains, the Godfather of newsletter writers Richard Russell in his latest commentary stated, “The double-dip is almost here, as six cities set new lows for the period since the 2006 peaks. There is no good news in October's report." David Blitzer, managing director at S&P Case-Shiller. I've said before that as I see it, our task in the years ahead will not be building potential profits, rather it will be how to avoid losing purchasing power.”
Russell continues:

“Question -- Would you be satisfied to retain your current standard of living during the coming decade? I've thought a lot about that. After all, what are we working and struggling for? The answer is that we're working so that we can enjoy "a decent life." Isn't that what all the buying and borrowing has been about? Americans want the good life, and they've been borrowing their heads off to have it.

The question I ask myself is, "What do I have to do so that I can continue to enjoy the great American 'good life'?" What comes to mind immediately is gold and the dollar and debt. The national debt of the United States is roughly $13.9 trillion. We've carried that huge debt in an atmosphere of historically low, low interest rates. But what happens as rates rise (as they are now doing)? How will our government deal with our unmanageable mountain of debt? I'm afraid that our debts are on the way to eating us up alive.

Which is another reason to own gold. When all else is lost, or maybe I should say lost in depreciated dollars, gold will be there as it has been for over 5,000 years. Gold is the ultimate survival mechanism.

We can't pay off our national debt with higher taxes. To do that would throw the nation into a second Great Depression. The only way we can deal with the debt is through a severely devalued dollar. I can't think of any other way -- but wait, there is one. That other way is to ignore the debt, kick the can down the road. Let other presidents and other Congresses wrestle with it. Of course, I doubt if we could get away with kicking the debt down the road.. I'm not even going to talk about defaulting on our debt. That would be unthinkable, and would put the US firmly in the banana republic class. In that case, the new best-seller would be a book titled, "The US, Death of a Nation."

So far, the US has been borrowing to finance our good life and our debts. We borrow from other nations, we borrow from Social Security, we borrow from whom ever will lend us money. To make our obsessive borrowing more attractive, we will have to raise rates. And that's when the trouble begins.”

I hope King World News readers and listeners understand how important it is what Russell was saying at the end there about rising rates. The United States has such a massive debt load that we simply could not service the debt were there to be significantly higher interest rates. Make sure to protect yourself by owning physical gold.

To subscribe to Richard Russell’s Dow Theory Letters CLICK HERE.


Eric King

KingWorldNews.com