My Blog
Richard Russell continues:
“The stock market also has its problems. Last week the Industrial Average closed above its May 1st peak -- the Industrial move was not confirmed by the Transports. This leaves the stock market in limbo, and it leaves investors in a quandary.
My choice for an investment position is -- gold coins (bullion) and GLD and enough cash to pay your bills. If the Fed acts to stimulate the economy, it would be bullish for gold. If the nation goes over the fiscal cliff, such an emergency would probably be bullish for gold. If Congress fails to raise the debt limit, it should be bullish for gold (another emergency).
If absolutely nothing happens, the prevailing forces of deflation will kick in, and that would be bearish for all commodities and probably bearish for gold. But wait -- if the whole scene turns deflationary, that would be a situation that Bernanke would not tolerate (the Fed is terrified of deflation), and Bernanke would almost surely flood the system with truck loads of fiat money -- that would be bearish for the dollar and bullish for gold.
Big picture -- emerging nations are slowing down. China's economy is slowing, Europe is in recession, employment in the US has stalled and unemployment remands high. In the face of this, the world forces of deflation are continuing. The US could now be suffering long-term structural damage, as the Fed has feared.
This all militates toward Fed action, but many question whether Fed action will do much good. The European Central Bank unveiled a bond-buying program last Thursday, and China announced major infrastructure projects last week.
The Fed can bull the markets, but it can't directly create jobs. During the Great Depression, the government created jobs through its alphabet agencies such as the CCC and the WPA. I wouldn't be surprised if the current government chooses that path again. In the meantime, the stock and bond markets are in a quandary. The trend, if there a trend-- where is it?
..................................
Below, the US dollar is looking bearish and has just broken below both moving averages. A cheaper dollar is bullish for gold.
Is world commerce slowing down? You wouldn't know it from ‘Dr. Copper,’ which is busting out from a good base and is now above both MAs.
In the meantime, my suggestion is currency and gold. As my friend, Bob Prechter once said, ‘There's nothing wrong with cash -- it gives you time to think.’ The only question in my mind is -- is it better to have your currency in paper, or is it better to have it in gold, better known as real tangible money? Personally, I trust gold more than I trust paper, but that's just me and hard experience.”
I would just add that the US dollar was down again today, this time breaking below the psychologically important level of 80, as the euro continues to rally by squeezing the shorts ahead of the German high court decision. Art Cashin correctly forecast in his KWN interview that we should expect to continue to see the euro shorts squeezed.
To subscribe to Richard Russell’s Dow Theory Letters CLICK HERE.
© 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.
Michael Pento just had an extraordinary KWN audio interview. He lets listeners know exactly what to expect this week from central planners and how it will impact key markets. The tremendous KWN interview with Michael Pento is available now and you can listen to it by CLICKING HERE.
The interviews with Michael Pento, Gerald Celente, James Dines, Marc Faber, James Turk and Art Cashin are available now. Also, be sure to listen to last week’s line-up of other KWN interviews which included Egon von Greyerz, Sean Boyd, John Hathaway, Eric Sprott and Jean-Marie Eveillard by CLICKING HERE.
Eric King
Richard Russell - Financial Crisis & The Bullish Case For Gold
The Godfather of newsletter writers, Richard Russell, believes the ongoing financial crisis remains very bullish for gold. Here is what Russell had to say: “The nation is approaching the ‘fiscal cliff.’ This is a negative for the market. On January 13, Congress will have to vote on whether to increase the national debt, which is now over $16 trillion and counting. Fiscal cliff and debt ceiling are both momentous decisions for Congress, problems that they'd rather not face.”
© 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.
September 11, 2012
