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Richard Russell continues:
“Bernanke insists that his “QE3 to infinity” is not bringing in inflation. In proof, the Fed uses its ridiculous inflation measure which leaves out the rising costs of food and energy. But what Bernanke doesn't talk about is inflation in commodities and tangibles.
Meanwhile, the price of art, medicine, college tuition and food is going through the roof. In fact, we are seeing bubbles in a great many areas. The yield on the Dow is 2.56%, far below the classic danger level which is 3.5%. According to the yield cycle, the stock market is in a dangerous bubble. And with bond yields tanking at unbelievable low rates, the bond market is also in a bubble.
Art is in an insane bubble with many classic pieces going from $35 to $50 million and up. The price of highly desired items such as classic cars is off the charts. Choice collectibles are in a bubble. Almost every business transaction is listed in the billions -- whatever became of thousands? Wall Street and businesses, in general, are in bubbles.
In short, we live in a multi-bubble world, a world that the Bernanke Fed has created. All this, as I see it, lays the slippery foundation for an absolutely massive primary bear market. It will be a bear market that I hope to help my subscribers survive through.
The dollar is the mirror twin of the euro, seen below. Euro down, dollar up and vice versa. The sinking dollar is dragging the fiat currencies the world over into the lower depths (the other currencies for export reasons must remain competitive with the dollar and the euro).
Gold -- surprised me with its strength. I thought it would take to the end of the year before gold could climb back into the 1700s. But gold rose into the 1700s today. I use GLD as a proxy for gold. The chart below shows today's big move UP in gold. At the bottom of the chart we see the slow stochastics, which are the lowest they've been since last May -- and what's better, they're in the process of turning up.
Late Notes -- I guess the feature today was gold, which acted beautifully. Up 31.80 to 1715.00. The next real move should be into the 1800s. Today all the precious metals and their cousins closed up -- GDX up 0.95, GDXJ up 0.48, CEF up 0.39, SLV up 0.84, HUI up 5.46 and so on. Again, the advantage of actually owning the one ounce coins is that you're not tempted to trade them.
The hardest thing to do in a bull market is to take a position and then to refrain from trading. When you trade, you're most likely to trade out of the bull market just before the next advance. Gold has one great advantage -- you never have to worry about gold going bankrupt. Thus, you can hold actual gold with impunity. The best way to handle actual gold in a bull market is to accumulate --never sell, but just continue to accumulate.”
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© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
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Eric King
Richard Russell - I See Catastrophic Insane Bubbles Everywhere
Today the Godfather of newsletter writers, Richard Russell, has written a very serious piece discussing the fact that we are seeing insane bubbles in many different areas. But Russell also covers the state of the gold market and what investors should be doing with their gold.
Here are Russell’s thoughts in his latest note to subscribers: “What's Bernanke doing for the dollar - or to the dollar? By creating multi-millions of additional dollars, the Bernanke Fed has knocked the dollar down. But due to weakness in other major currencies, the dollar (which is now oversold) has rallied over the last day or so.”
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
November 7, 2012
