Richard Russell – 2013 & The Greatest Bubble In World History
With 2013 now upon us, the Godfather of newsletter writers, Richard Russell, told his subscribers they are now living through the greatest bubble in history. Russell also discussed gold and the important breakout in the closely-watched VIX. Here is what Russell had to say in a note to subscribers: “You and I are watching, or I should say living through, the greatest bubble in world history. What could it be? Is it the world population growth? Is it the explosion of world communication? Is it the progress in health?”
With 2013 now upon us, the Godfather of newsletter writers, Richard Russell, told his subscribers they are now living through the greatest bubble in history. Russell also discussed gold and the important breakout in the closely-watched VIX. Here is what Russell had to say in a note to subscribers: “You and I are watching, or I should say living through, the greatest bubble in world history. What could it be? Is it the world population growth? Is it the explosion of world communication? Is it the progress in health?”
Richard Russell continues:
“It might be any one of
those, but no -- it's the credit bubble. Think of it. The US now has a
national debt of over $16 trillion. That doesn't include incurred debt
that is not on the books. The question is -- how will this enormous
debt ever be handled? (1) It might be refinanced, meaning that it might
be (if possible) kicked down the road like an old tin can.
(2) It might be reneged on,
which would be a default (unthinkable, since this would be an admission
of sovereign bankruptcy. (3) The debt could be addressed through
devaluation, meaning destroying the purchasing power of the dollar. The
third is by far the most likely way that the debt will be addressed,
since we are already on this path. Politically, it is the most
palatable way, since it is the way that attracts the least attention
from the voters.
Right now sophisticated
investors are protecting themselves from the diminishing purchasing
power of the dollar. How do they do it? Easy, they swap their Federal
reserve notes for tangible items of value -- million dollar apartments
in New York, fabulous works of art, rare gems and jewelry, property such
as thousands of acres in New Mexico or Montana, classic automobiles
such as rare Ferraris or Mercedes, hundreds of acres of arable farmland,
collectibles, and silver, platinum and gold.
For the average person,
most of the foregoing are difficult or even impossible to own. My own
thought is that the easiest and most sensible way is to own silver or
gold. The question is always, “OK, so I own some gold coins. Where
should I put them?” Ah, the eternal question. My suggestion is (1)
place them in a good steel safe at home, (2) bury them in a plastic
container in the ground, (3) buy the coins through an outfit you can
trust such as a Swiss or Canadian bank, (4) place the coins in a bank
vault.
My own instinct is to watch
the unfolding picture, and “play it as it lays.” In other words, I
honestly don't know how this is all going to play out and neither does
anyone else. The one thing I feel certain about is that the current
debt or credit bubble will be met with devalued dollars. That means
that we should all prepare for tough times and above all, we must PAY
ATTENTION.
Below, gold appears to be finding support in the area of its red 200-day moving average.
Technical analysis is more
an art than a science. Often it entails deciding which studies to
believe and which studies to jettison at any given time. Right now, I'm
interested in the VIX, often referred to as the “fear index.” Over the
last day or so, the VIX has suddenly surged to a bit over 20, as you
can see on the chart below. This means that options buyers are
preparing for an increase in volatility some time during the coming 30
days.
I pair the jump in the VIX
with the rising count of distribution days in the markets. Distribution
days are days when the market is down, while volume is more than the
volume of the preceding day. Distribution days tend to be days when the
institutions are selling.
Late Notes - We're now at
an interesting juncture where technical conditions in the market are
poised against potentially very bullish news. Even if news of the
completion of the fiscal cliff comes out, I'm not sure whether the Dow
has enough strength to better its September high -- particularly since
technical conditions are negative for the Dow.
For this reason, I have
chosen to remain neutral and safe. Long-term, my preferred position is
to have one-third of my assets in cash, one third in my home, and the
rest in gold (bullion coins if possible).”
Article Source: Kingworldnews
Article Source: Kingworldnews