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Russell continues:
Question -- How does gold "get away" with paying no interest?
Answer -- Gold pays no interest because it is ultimately safe. Gold is the only currency that has lasted through the centuries, going back 6,000 years. Currencies have to pay interest so that they will be attractive enough for people to hold them. As a rule, the poorer and riskier the nation, the more its currency must pay in interest in order to attract investors. Normally, the dollar would be paying an attractive rate of interest, except for the manipulations of the Fed. Thus short rates in the US are around zero, courtesy of the Fed.
Now I want to talk a bit about silver...The modern silver to gold ratio runs roughly from 40 to 80. When one ounce of gold buys close to 80 ounces of silver, silver is too cheap or gold is too expansive. When one ounce of gold buys only 40 ounces of silver, it's the other way around. As of now, one ounce of gold buys about 47 ounces of silver. So silver is not that cheap compared with gold, but the trend has been towards strength in silver vs. gold.
SLV...Of late, the uptrend has been interrupted, and the current formation bothers me a bit. If SLV drops to 27 I'll have to think that something may be changing in the silver picture, but that may just be me -- "Mr. Caution."
Remember, in hard times silver is treated as an industrial metal, and it loses its ranking as a precious metal.”
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Remember do not try to time these markets, simply buy physical gold and silver each month and take delivery.
Eric King
Richard Russell - Gold Bull is Angry, Shaking Off Late-Comers
With gold and silver weaker in overnight trading, Richard Russell recently commented, “I keep wondering if we're now in the "scary correction" phase of the gold bull market. This is the juncture where gold scares hell out of everybody, prior to its final speculative phase. The gold bull is angry, and he wants to gore or shake off all the late-comers and day-traders.”
January 17, 2011
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