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Richard Russell continues:

“Obviously, there are some powerful groups (the shorts) that do not want to see gold move into and above the 1800s. At the bottom of the rectangle, gold has found support at approximately 1575.

For the last two weeks, gold and the dollar have moved in unison, which is most unusual. At the bottom of the chart we see the slow stochastics, which are in the neutral or middle zone. Since the bull market in gold is still in force, I would expect gold, ultimately, to break up and into the 1800 + zone.

One caveat -- After rising for 12 years in a row, I expect the bull market in gold to produce a final upside blow-off. Bull markets don't usually die with a whisper and a snore. Often prior to a final upward explosion, we will see a sharp correction, and I have expected something like that for gold. The final correction serves to clear the air and readies the market for a climactic rise.

One reason why we may not see the usual correction in gold is that most of the world's central banks are now accumulaters of gold on any weakness. Both China and Russia are now eager buyers of gold -- both have a small percentage of gold in their reserves.

It's also significant that most Americans are afraid of gold, even though it has risen year after year for twelve years. Imagine the following a stock would enjoy if a given stock had risen twelve years in a row.

Since when does making money make one a sage? Ever since Warren Buffett bought a chunk of the Washington Post, he's turned himself (or the media has turned him) into an oracle. Buffett says, yes, we should "tax the rich." That doesn't concern Buffett, who could drop a few billion and not know it.

Buffett may be a great company-picker, but when it comes to taxes and government, he's no oracle in my eyes. Of course, I'm bitter. I bought ten shares of Berkshire at $250 a share and sold them when the stock hit $500. Who knew? Who ever knows? Actually, I bought the shares of Berkshire so I could read Warren's annual report.

In the 1974 bear market, Berkshire's shares dropped in half. I wonder how many BRK followers held their stock through the 1974 disaster?

Question --Why is gold the ultimate safe-haven investment?

Answer -- Because gold is the only item that can't go bankrupt. For thousands of years, gold has been treated as pure wealth.

Irony -- The lust for gold opened up the American West. In 1849 men left their wives and families and homes and headed West in the hope of finding gold. Yet today, most Americans would not swap their intangible, unbacked dollars (Federal notes) for gold.

For a dozen years, Americans have turned their backs on an item that has risen to new highs each and every year. The stage is set for a huge reversal in sentiment. My intuition says the turn will come between now and 2015.”

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Eric King

KingWorldNews.com

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Richard Russell: Stage Now Set For Public To Enter Gold Market

With continued volatility in global markets, the Godfather of newsletter writers, Richard Russell, writes about the action in the Metal of Kings, Warren Buffett and the public’s long awaited entry into the gold market in a note to subscribers: “Where's gold going? -- As you can see on the chart below, gold has formed an almost perfect rectangle. The top of the rectangle has been tested three times, and each time gold was turned back.”

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December 11, 2012

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