After yesterday’s carnage in global stock markets, the Godfather of newsletter writers, 91-year-old legend Richard Russell, warned people to stay out of the stock market. He also discussed the Fed, gold, silver and the possibility of hyperinflation.
August 25 (King World News) – Blood In The Streets
Richard Russell: “This is what blood in the streets looks like. (Yesterday) The Dow opened down almost $1100 points in the first three minutes. Three minutes later it bounced almost 700 points higher. As I write midmorning, the Dow is down almost 400 points. With this action I presume that the Fed will not increase rates, as rising rates are the last thing this market needs.
This morning shows us what panic can do. We saw panic on the downside and panic on the upside. And then it slowly turned to calm. The big question now is whether the market will test the morning lows. In the meantime the safest place to be is in gold.
Russell Warns Stay In Gold & Silver And Out Of The Stock Market
Today’s action showed that investors are extremely nervous and are ready to panic on any unexpected news. With the Dow staging a recovery on its massive 1000 point decline, the recovery did not take the Dow into plus territory at the close. Therefore I believe we will see a slow motion decline in the near future to test the extreme lows of today.
Conclusion: stay in the precious metals and stay out of the stock market. I consider the Dow recovering from its low as the market churning and spinning its wheels. Over the next few weeks the Dow should slowly sink and test its extreme low. The panic is over but the losses will remain. This is typical action in a primary bear market.
I’ve seen this happen dozens of times. On the downside, this was real selling. With stocks declining in harmony with the primary bear trend. Stocks are rebounding but they are just burning up energy. If the market down, you can bet that over the next three weeks it will test the lows that were recently recorded. As I write, the dow is down over 500 points. It appears almost certain that the Dow will be down at the close.
With oil under $40 a barrel the world is deflating. When the Fed realizes what has happened, it will open the spigots wide, possibly leading to hyperinflation. The rest of the world’s central banks will follow the lead of the Fed. What I don’t know is whether we are headed to hyperinflation. But hyperinflation would not surprise me.” I would urge all KWN readers around the world to subscribe to Richard Russell’s 91 years of wisdom and remarkable writings at Dow Theory Letters by CLICKING HERE TO SUBSCRIBE.
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