With continued wild trading action taking place in major markets around the world, the Godfather of newsletter writers, 90-year old Richard Russell, covers everything from the "economic hope of the world" to gold and the unprecedented action taking place in global markets.
Russell: "The crashing price of oil has thrown the markets into a tizzy. Like a prize fighter who has been knocked down, the market staggers around and tries to get its footing. The net result is a confused ending.
As I write 40 minutes before the close… the dollar index is down 0.18 while spot gold is selling at $1193.60. The gold miners are mixed with most of them down. I continue to look for the third phase upward explosion in this bull market, but so far Mr. Market is keeping his trend a secret.
The crashing oil price bespeaks of deflation, but if deflation is in the saddle, why is gold still holding above 1100? Japan continues to fight deflation with enormous money creation — all to no avail. Russia’s ruble is collapsing and the price of oil is wrecking Putin’s plan for world leadership.
The economic hope of the world is the US, but traders are afraid that what’s happening in most of the world will soon rub off on the US. The barometer of a nation’s health can be seen in the action of its currency. Today the dollar is down slightly and conventional wisdom puts the first boost in US interest rates into late 2015 or even 2016. When all seems lost, investors head for the safest currency. The safest currency on the planet is the currency that needs no backer. It’s the currency that represents pure wealth, and that currency is gold.
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When I reached the age of 90, I became more philosophical. I thought a lot about capitalism. Is there a flaw in the concept of capitalism? One flaw may be that capitalism demands constant growth. Every corporation under capitalism wants to grow bigger, wealthier and more powerful. This presents problems. No company can grow forever. No tree grows to the sky. No individual accumulates all the world’s wealth.
No corporation under capitalism is ever satisfied. Thus capitalism is not conducive to satisfaction or peace. If capitalism has a motto, it is "more, bigger and richer." After a long lifetime of thinking, I’ve concluded that there is no happiness without peace of mind. The US has done well under capitalism from the day of its birth. But my personal objection to capitalism is that it’s not amenable to peace of mind. Capitalism always leads to strife, because nobody’s ever satisfied.
Peace of mind implies loss of fear. Behind all disease, behind all strife, behind all unhappiness lies fear. So how in a world cursed by fear can one find peace of mind? I have found that the way to peace of mind is through the acceptance of the presence of God. This is why I have never been counted as or heard of a happy atheist. The sophisticate sneers at spirituality, which is why I have never met a sophisticate who is happy."
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