JP Morgan, Gold & The Future Of The Dollar - Richard Russell
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On the heels of continued volatility in key global markets,
the Godfather of newsletter writers, Richard Russell, discussed JP
Morgan involvement in the gold market and the future of the US dollar.
Russell also warned about the massive worldwide debt, covered stocks,
and also included two charts of gold and the US dollar.
Richard Russell: “The
fundamentals in the US and the world are enough to turn your hair
gray. Debt worldwide is out of control. Total debt to GDP in most
countries in the world is at a mind-blowing 300-400%. It's obvious that
this debt will never be repaid. As the US continues to grow, it is
forced to borrow more money.
The
Fed now owns $2.2 trillion in federal debt. This year, in 2013, the Fed
has purchased more debt than the Treasury has issued. I could go on
and on about the horrors of the debt situation. But remember, the
market is not stupid. It contains all the information known to
everybody. This is the reason that I follow the markets so closely. If
we are heading into a brick wall, the market will know it and reflect
it.
Ultimately
the nation is caught in a vicious vice in which it must borrow more and
more to sustain itself. The question now is not how to generate income
but where to find the safe zone. When looking for safety investors
normally make a dash for cash. But with the Fed creating cash
wholesale, the future of the dollar is in question.
A
nation is as good as its currency, and a currency is as strong as a
given nation. Below we see the US Dollar. I've applied the same rules
to the dollar as I've applied to the Dow ... If the Dollar should fall
apart, I would consider such an act as bearish as a crashing Dow.
As
the purchasing power of the dollar declines, gold comes to the fore. I
see the action of gold as representing an ever expanding base. JP
Morgan currently has a large position in gold. My advice -- follow the
big money. And there is no bigger money than JP Morgan.
Below,
gold breaks down from a little consolidation pattern. I continue to
believe that gold is building a large base with support at 1280.