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Richard Russell continues:
“Yesterday, ‘the Scream’, a painting by Munch, sold at auction for a record $119 million. I doubt if the buyer cares whether that painting will be worth $100 million, $50 million or $200 million ten years from now. The buyer knows that he owns a priceless work of art, something that will double in value in case of wild inflation or something that will be worth $60 million during the worst deflation.
Even if the dollar becomes worthless as a unit of exchange, the Munch painting will still be worth a fortune in whatever unit of money is in favor ten or fifty years from now.
All of which tells us something about gold. For over five thousand years, gold has represented purchasing power. No matter what form of money was in existence at the time, gold possessed purchasing power, which is why many wise men own gold.
If I asked you to leave something for your great grandkids in a package to be opened one hundred years from now, would you leave them a wad of hundred dollar bills or one hundred gold coins? If you had any brains you would pick the gold coins.
I'd venture that Warren Buffett would also pick the coins. Why? Because we know that one hundred years from now the gold coins would represent value and purchasing power and the dollar might not exist. End of story.
Russell also added: “La Jolla is a wealthy town. Walking around La Jolla you note that this town is unlike most of the country. La Jolla is an isolated town built on wealth. But I have a secret barometer. I often call out to a local deli to order a sandwich.
In normal times it takes 20 minutes from the time I call the order in until the time the sandwich is delivered. But lately I note that I call in my order, and five minutes later the order is delivered here. Evidently, business is very slow at the deli and my order goes out immediately.
I also hear that the La Jolla restaurants have slowed down in April -- for the first time in this recession. Evidently, what's happening in the rest of the country is finally hitting La Jolla.
Late Notes -- June gold closed up 10.40 at 1645.20 and still above 1600. Gold looks fine to me. Sit with it, and consider your gold part of your estate. GDX closed higher which is a good sign for the gold miners.”
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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 This material may not be published, broadcast, rewritten, or redistributed.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 - Warren Buffett, Gold & My Secret Barometer
With continued volatility in global markets, the Godfather of newsletter writers, Richard Russell, had some very interesting charts and warnings in his latest commentary. Here is what Russell had to say: “It's difficult to make people believe that there's a difference between an investment for a possible profit and a store of wealth. But rich people know the difference. When a man has made as much money as he can, he starts worrying about losing that money. That's the time when he wants to own “eternal stores of wealth.”
© 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.
May 6, 2012
