On the heels of continued volatility in key global markets,
the Godfather of newsletter writers, Richard Russell, discussed gold at
length and also warned that the Federal Reserve has set America up for
“disaster.” This is a fantastic piece where Russell notes the gold
market may be ready to roar as physical gold is continuing to be drained
from the COMEX.
Bull
markets don't usually end with what looks like a correction -- bull
markets usually end with an exciting and frantic “all-in” entrance of
the crowd. We have not seen that, so far. I think it's coming. Gold
has been bad-mouthed so thoroughly that I think gold could rally back
halfway to its old high (above 1900) before the public and the pros
would even look at it.
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Richard Russell: “Everybody
knows that the US has an almost unsolvable problem with debt. Let's
call it a predicament, since there is no way of solving the debt problem
in an acceptable way (I mean in a politically acceptable way). Of
course we could declare sovereign bankruptcy -- or we could turn to
hyperinflation and literally inflate our way out of the debt-trap. But
neither would be acceptable or politically possible.
But
before the predicted disaster, you can be certain that the coming
trouble will be sensed and registered in the price of something. It
will show in the price of stocks or gold or bonds or the dollar. In
other words, it will show somewhere in price.
What
about the bond market -- isn't the bond market now saying, “trouble
ahead?” In my opinion, not yet. True, bonds have taken a beating in
recent months, but I don't call the decline in bonds, so far, a red-flag
prediction of disaster ... And the stock market continues to rise,
probably based on the current ocean of liquidity.
How
about gold? Ah, gold may be about to raise the red alarm-flag. But not
quite yet. As a personal opinion, I believe gold has now put in a
major bottom. Wait -- what about price? Ah, there you've got me. Even
if a bottom has been put in, we have not yet seen the “meat.” The
price of gold has not yet started to boom. It's one thing to say that
you believe “the bottom is in,” but it's another thing to see the item
surge off its low.
I
believe the bottom has been put in, and if, indeed, the bottom (the low)
has been put in, then there's no direction for gold to go but UP ... I
also insisted that my subscribers stick with gold items, and
particularly with their actual bullion gold. So that is where I assume
my subscribers are now positioned -- in the DIAs and in gold of all
types and varieties.
I'm
not completely satisfied with the DIAs: The P&F chart suggests that
we could see a good upside run from here, but I don't think it would be
a long-lasting, extended bull move. I'm still worried about a
potential disaster somewhere in our future. You see, I'm afraid that
the Greenspan/Bernanke Federal Reserve has set up America for a future
disaster.
As
for gold, I'm thinking that we may be seeing the wind-up of the gold
bull market -- or let's call it the third, speculative phase of the
great gold bull market. I know that conventional wisdom insists that
the great gold bull market has ended. I'm not so sure -- I'm still
looking for the all-out final blow-off in gold that will end the great
gold bull market.
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