Richard Russell 01 (May 08 - Dec 14)

[winston]

Richard Russell: Forget everything you've heard about a gold bubble
From Richard Russell in Dow Theory Letters:

Question: Russell, what do you make of all the talk about gold being in a bubble?

Answer: I've seen a number of bubbles in my life, and they have all been associated with huge and frenzied participation by the public. Think of the tech bubble, the housing bubble, every bubble was characterized by broad and frantic public participation.

Who do you know owns gold or has any gold stocks or ETFs today? Ask 20 people at an investment conference whether they have participated in the gold bull market, and you will be shocked at how few have entered the great gold bull market.

So if gold is in a bubble, it's a bubble in the minds of those who have completely missed the gold bull market. Public participation in the gold bull market has, so far, been unbelievably thin in the US. If gold is in a bubble, it's a bubble unlike any that I have ever seen before.

[iam802]

The GLD chart seems to be under pressure (and that is why the article is written).

http://stockcharts.com/h-sc/ui?s=GLD&p= ... 7176099074

[winston]

RICHARD RUSSELL ON STAYING SOLVENT by Cullen Roche

I think this pretty much sums up the way a great deal of investors currently feel about the stock market. Although I can’t say that I entirely agree (I think there are swings worth taking here and there) I am certainly not one to argue with the great Richard Russell:

“Perhaps Lord Keynes’ wisest admonition was when he said, “The market can stay irrational longer than you can stay solvent.”

Let’s take the current situation. The dollar is under attack, housing is still sick. unemployment remains a chronic problem, stocks are rising on a sea of liquidity. Iran and North Korea both have nuclear capabilities and are both “wildly unstable.” With this background, a stock market that is rising might easily be termed “irrational.”

I’m not the only analyst who considers a rising market in this area as “irrational.” My strategy, in view of what I just wrote, is to stay solvent. What’s my strategy for remaining solvent? Easy, I feel more comfortable out of the stock market and on the sidelines.

I’m not saying that the stock market isn’t going higher. My PTI and my Lowry’s studies say that it is. But this stock market advance is a “pitch” that I’m not going to swing on. The bull market in gold is enough for me. I can sleep with my gold and silver positions. And frankly, I couldn’t sleep with a large position in the stock market.

The reason — this market is too “irrational” for me. And I don’t say it’s irrational because of outside news events. I’m not saying that it’s just the unsolved housing mess that bothers me. No, it’s the fact that the dividend yield on the S&P is a micro 1.86%.

Buying a selection of stocks when the dividend yield is flashing “danger” is not my cup of tea. I’ve been around too long to feel that I have to be in the market every time it advances..

There’ll be other opportunities; the market is always there. I’ll enter the stock market when I like the “pitch.” In baseball, it’s three strikes and you’re out.

In the stock market, one incorrect swing of the bat, and you can take a bath that will set you back financially for years — if not for life.”

Source: Dow Theory Letters

http://pragcap.com/richard-russell-on-staying-solvent

[winston]

“Disregard The Amateur Warnings And Ride The Gold Bull,” Says Richard Russell
By Prieur du Plessis

The remarks below come from 86-year old Richard Russell, writer of the daily Dow Theory Letters. Russell has been bullish on gold from just about the start of the nascent bull market in 2001.

“Lately there’s been a tide of uninformed warnings to the effect that gold is in ‘a dangerous bubble’. These anti-gold know-nothings haven’t seen a gold bubble yet, but I’m predicting that a phenomenal gold surge (call it a ‘bubble’ if you like) lies ahead.

The only thing the recent gold correction has accomplished is to encourage the gold-haters and to knock the amateur traders out of the gold market.

“Gold is in a true primary bull market, and the bull’s number one task now is to rise with as few riders on his back as possible.

This is the reason for recent erratic (and probably scary) gold action. As for my subscribers, my advice is ‘Disregard the amateur warnings and ride the bull’.”


http://www.dailymarkets.com/stock/2011/ ... d-russell/

[winston]

Rich Man, Poor Man (The Power of Compounding)
by Richard Russell, Dow Theory Letters


For the average investor, you and me, we're not geniuses so we have to have a financial plan. In view of this, I offer below a few items that we must be aware of if we are serious about making money.


Rule 1: Compounding: One of the most important lessons for living in the modern world is that to survive you've got to have money. But to live (survive) happily, you must have love, health (mental and physical), freedom, intellectual stimulation – and money.


Rule 2: DON'T LOSE MONEY: This may sound naive, but believe me it isn't. If you want to be wealthy, you must not lose money, or I should say must not lose BIG money.

Absurd rule, silly rule? Maybe, but MOST PEOPLE LOSE MONEY in disastrous investments, gambling, rotten business deals, greed, poor timing. Yes, after almost five decades of investing and talking to investors, I can tell you that most people definitely DO lose money, lose big time – in the stock market, in options and futures, in real estate, in bad loans, in mindless gambling, and in their own business.


RULE 3: RICH MAN, POOR MAN: In the investment world the wealthy investor has one major advantage over the little guy, the stock market amateur and the neophyte trader. The advantage that the wealthy investor enjoys is that HE DOESN'T NEED THE MARKETS. I can't begin to tell you what a difference that makes, both in one's mental attitude and in the way one actually handles one's money.

The wealthy investor doesn't need the markets, because he already has all the income he needs. He has money coming in via bonds, T-bills, money market funds, stocks and real estate. In other words, the wealthy investor never feels pressured to "make money" in the market.

The wealthy investor tends to be an expert on values. When bonds are cheap and bond yields are irresistibly high, he buys bonds. When stocks are on the bargain table and stock yields are attractive, he buys stocks. When real estate is a great value, he buys real estate. When great art or fine jewelry or gold is on the "give away" table, he buys art or diamonds or gold. In other words, the wealthy investor puts his money where the great values are.

And if no outstanding values are available, the wealthy investors waits. He can afford to wait. He has money coming in daily, weekly, monthly. The wealthy investor knows what he is looking for, and he doesn't mind waiting months or even years for his next investment (they call that patience).

But what about the little guy? This fellow always feels pressured to "make money." And in return he's always pressuring the market to "do something" for him. But sadly, the market isn't interested. When the little guy isn't buying stocks offering 1% or 2% yields, he's off to Las Vegas or Atlantic City trying to beat the house at roulette. Or he's spending 20 bucks a week on lottery tickets, or he's "investing" in some crackpot scheme that his neighbor told him about (in strictest confidence, of course).

And because the little guy is trying to force the market to do something for him, he's a guaranteed loser. The little guy doesn't understand values so he constantly overpays. He doesn't comprehend the power of compounding, and he doesn't understand money.

He's never heard the adage, "He who understands interest – earns it. He who doesn't understand interest – pays it." The little guy is the typical American, and he's deeply in debt.

The little guy is in hock up to his ears. As a result, he's always sweating – sweating to make payments on his house, his refrigerator, his car or his lawn mower. He's impatient, and he feels perpetually put upon. He tells himself that he has to make money – fast.

And he dreams of those "big, juicy mega-bucks." In the end, the little guy wastes his money in the market, or he loses his money gambling, or he dribbles it away on senseless schemes. In short, this "money-nerd" spends his life dashing up the financial down-escalator.

But here's the ironic part of it. If, from the beginning, the little guy had adopted a strict policy of never spending more than he made, if he had taken his extra savings and compounded it in intelligent, income-producing securities, then in due time he'd have money coming in daily, weekly, monthly, just like the rich man. The little guy would have become a financial winner, instead of a pathetic loser.


RULE 4: VALUES: The only time the average investor should stray outside the basic compounding system is when a given market offers outstanding value.

I judge an investment to be a great value when it offers
(a) safety;
(b) an attractive return; and
(c) a good chance of appreciating in price.

At all other times, the compounding route is safer and probably a lot more profitable, at least in the long run.


http://www.lewrockwell.com/orig12/russell-r4.1.1.html

[winston]

RICHARD RUSSELL: HYPERINFLATION? WHAT HYPERINFLATION?
by Cullen Roche

Few investors have been more vocal about the potential collapse of the US Dollar than Richard Russell. But as the recovery builds strength Russell has dramatically toned down his commentary about any potential hyperinflation and collapse of the USD.

In his Friday commentary he said the market action simply isn’t even remotely displaying a hyperinflationary environment or even an eventual hyperinflationary environment. And he’s dead right (via Dow Theory Letters):

Comment — I read a lot about “the coming hyper-inflation.” If hyper-inflation is in our future, I don’t see it in the market action.

The precious metals are hesitating, the CRB Commodity Index is in a bullish trend but is now hesitating, XLE, the widely-followed energy exchange traded fund has been in a bullish trend but is now moving sideways, oil has been declining, and March oil is now selling below 86.

And what’s most important (nobody seems to be noticing this) is that Chinese stocks are most definitely in a down-trend. China has been the monster buyer of commodities, and if China is slowing down, that will put a big question market in the hyper-inflation scenario.

One other item — if we’re heading for hyper-inflation Treasury bonds should be falling out of bed. Not so, below is a daily chart of the 30-year US Treasury bond, and it’s hardly falling out of bed. If there’s inflation coming and certainly hyper-inflation, the bond market will smell it. From the looks of this chart, I’d have to bet deflation over inflation.

When ever I hear a consensus view of what lies ahead, I always check with the market. If the market doesn’t agree, I remain sceptical.

As for the current hyper-inflation forecast, I’ll remain sceptical as long as the market is sceptical.

Source: Dow Theory Letters

http://pragcap.com/richard-russell-hype ... rinflation

[winston]

Richard Russell: Gold is the Safest Currency

Speaking at the Casey Research Gold and Resource Summit, Richard Russell told the audience, “I’d feel much better holding everything I own in gold. Holding dollars means holding a depreciating asset and I feel much more confident holding gold.”

He went on to say, “The good part about gold is it can’t go bankrupt and it’s very hard to manipulate gold because it’s international. I know the Fed would love to manipulate gold but it can’t control it because it’s traded all over the world, every hour of the day and night.”

We’ve got these highlights and more from a Q&A with Richard Russell in the video below.

http://www.caseyresearch.com/editorial. ... 207ED0311C

[winston]

"Surging gold tells the world that something is terribly wrong" Advertisement
From Richard Russell in Dow Theory Letters:

This nation is so riddled with lies and corruption, sometimes I wonder how the U.S. has survived the many centuries since the Founding Fathers gave us our great Constitution.

No wonder Fed Chief Bernanke fought so hard to keep the Fed's lending a secret. I just read in Rolling Stone magazine a story entitled "The Real Housewives of Wall Street." It seems that the Fed loaned bailout money of $220 million to the wives of two Morgan Stanley bigwigs. After his wife got a big taxpayers bailout John Mack, CEO of Morgan Stanley, bought a $15 million home equipped with a 12-car garage. Outrageous!

When you think about it, it's no wonder that Wall Street and the Fed hate gold. Gold exists outside the system. The Fed can't manipulate or create gold the way they do Federal Reserve Notes. When gold rises, as it has been doing, it hoists a red flag over Wall Street, the Fed, and the economy. Surging gold tells the world that something is terribly wrong. All the lies, corruption, and secrets of the Fed and the politicians can't erase the dire message of gold.

Gold is the protector and refuge of the common man. No wonder all the recent record highs in gold remain unreported by the media.

[winston]

A gold tsunami coming

“We’re moving nearer and nearer to the edge of the hurricane. I can feel it in my bones. Every newspaper now carries an ad for gold. The ironic clincher was this ad below that I clipped from a weekly newspaper.

“Is there a gold bubble? Are you kidding me? Here’s an ad that somebody paid for suggesting that people should turn in their gold (!!) for Federal Reserve Notes. They’re not telling you to buy gold during one of the greatest bull markets in history – hardly, they’re asking you to throw parties in which the object is to get ignorant people to SELL their gold.

“I can feel them caressing my face – the early breezes. They are blowing gently and hinting of the forthcoming gold hurricane that will sweep across the US and the planet with all the force and power that was seen when gold was first discovered at Sutter’s Creek during the California gold rush of 1849.

The gold rush of the 2000s is in the wings. The old phrase is ringing in my ears again (I haven’t heard it since the late ’70s): ‘There’s no fever like gold fever’.

“If the temperature of full gold fever is a hot 106, we’re only at 99 now, but I can feel it, I can tell you that the temperature is rising, rising.

“The panic to buy gold will override everything else. It will be one of the greatest financial phenomena that most of today’s investors will ever see. It will blot out everything else like a cloud blotting out the sun.

“After the calm, comes the storm. We’ve been watching ten years of gold climbing amid an atmosphere of calm. The great gold tsunami lies ahead. It will be historic.

“… BEFORE the great gold tsunami we might have a frightening gold correction that would clean out all the gold sceptics. This ‘clean out’ may be necessary prior to the big gold tsunami, and it’s a reason to hold some cash and not put ALL your money into gold at this time. Remember the old adage – ‘The market always does what it’s supposed to — BUT NEVER WHEN’.”

Source: Dow Theory Letters, April 21, 2011.

[winston]

S&P 500 – the “soldiers are deserting,” says Richard Russell by Prieur du Plessis

Where breadth goes, the market usually follows,” goes an old market saying. Breadth indicators are useful tools to assess the inner workings of the market’s rallies or corrections, and are used to identify strength or weakness behind market moves, i.e. to assess how the bulls and the bears are exerting themselves.

Let’s consider one measure of stock market “internals”: The number of NYSE stocks trading above their respective 50-day moving averages has declined to 55% from more than 75% at the end of April (see top section of chart below).

In order to be bullish about the secondary or intermediate trend, one would expect the majority of stocks to trade comfortable above the 50-day line.

Although the indicator is back above 50 after a dip below this level a few days ago, the outlook for the intermediate trend has weakened over the past few weeks, but it is premature to cry “wolf”.

For a primary uptrend to be in place, the bulk of the index constituents also need to trade above their 200-day averages. The number at the moment is 76% – somewhat down from its early April high of 83%, but nevertheless still firmly in bullish territory.

Source: StockCharts.com

Richard Russell, 86-year old author of the Dow Theory Letters commented as follows on the deteriorating market breadth: “This is a bearish picture. The ‘soldiers’ are deserting even while the ‘generals’ continue to march forward. In a war, this would be a prelude to disaster. In the stock market, it may be the same.”


http://www.investmentpostcards.com/2011 ... oo%21+Mail