As people continue to digest breaking news out of Greece and around the world, the Godfather of newsletter writers, 90-year-old Richard Russell, discusses the war against deflation, gold, silver, the horrors of war and what he is telling his subscribers to do right now. Included in this piece is one of the most tragic images you will ever see.
Richard Russell: "Monday was Memorial Day, the day in which we show our appreciation to the hundreds of thousands of men who have died in America’s wars. My family on my father’s side has fought in all of America’s major wars, from the Revolutionary War to the Civil War to World War I and World War II. Last night I watched Ken Burns’ amazing documentary, The Civil War.
Casualties and deaths during the Civil War were astounding. During the Civil War, two percent of the population of the US died. Of the deaths in the Civil War, two out of three were caused by disease or infection. I don’t think I’d ever call the world civilized until men cease killing each other in wars.
One of the most tragic images you will ever see is that of the sad young girl (below) who is comforted by her brother as she mourns at her father's grave. Her father lost his life in the Iraq War at the young age of 30, leaving behind his wife and children. The distraught young girl can be seen clinging to her father's tombstone on Memorial Day — a tragic image and a harsh reminder of how the horror of war impacts so many lives.
Turning To The Stock Market
Turning to the stock market, I used to use the Dow Jones composite average as an accurate way of determining the trend. The Dow Jones composite consisted of 65 stocks: 30 Industrials, 20 Transports and 15 Utilities. I might as well tell subscribers now that I’m biased to the bull side in the stock market. I’d much rather see a continuation of the bull market than the birth of a bear market.
The War Against Deflation
I’ve said all along that the Fed will not tolerate deflation, and that it will do whatever it takes to keep the US economy from deflating. On this basis I do not expect the Fed to raise rates this year or next, and it would not surprise me to see the Fed bring in QE4 or something like it.
In its effort to ward off deflation, I expect one of the following to occur: the government will announce make work programs as per the 1930s, where millions of men were put to work under the auspices of government programs to build post offices and freeways and bridges as they sought to build America’s infrastructure. The second program I expect is an all-out multi-trillion dollar program to build up America’s military, including its Navy and Air Force. The Great Depression of the 1930s ended with the lend lease program and the military buildup prior to World War II.
Late Notes — As I write five minutes before the close, Industrials are down 182 and perched just 50 points above the critical 18,000 mark. Transports are down 135 and just 349 points above the 8,000 level. Utilities are down 4 to 584 and the Nasdaq is down 56, only 33 points above the key 5,000 level.
When big numbers such as 18,000, 8,000 and 5,000 are violated, the item usually declines to the next lowest big number.
My Subscribers Are Out Of Stocks And Holding Physical Gold And Silver
Gold is down 17.5 to 1187.4 and silver is down 0.33 to 16.72. Is this the start of a correction, or a primary bear market (in stocks)? As I’m writing there is absolutely no way of telling, but either way my subscribers and I are out of the stock market and watching the show while holding physical silver and gold." You can subscribe to Richard Russell's 90 years of wisdom and remarkable writings at Dow Theory Letters by CLICKING HERE TO SUBSCRIBE.
***ALSO JUST RELEASED: Bill Fleckenstein On Gold And Silver Plunge, The Dollar, His Plan To Short U.S. Stocks Plus A Bonus Q&A CLICK HERE.
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