Richard Russell 01 (May 08 - Dec 14)

[winston]

Richard Russell: Why you must hold gold for the long term...
From Richard Russell in Dow Theory Letters:

In the history of fiat or government-produced paper money, no fiat money in history has ever survived, all are now museum pieces. The reason is that fiat money is produced (without the discipline of gold) in any quantities a government desires. When an economy slows (as now) or when a nation goes to war (which is always wildly expensive, as now) the temptation to print the needed "wealth" becomes overwhelming.

Eventually, the world distrusts man-made "money." In the end, each new issue of fiat money dies. The fate of the US dollar will be no different. Which is the real reason why we hold gold for the long-term.

[winston]

RICHARD RUSSELL: THIS IS A BEAR MARKET RALLY

Deep thoughts here from one of the all-time greats:

I don’t believe most investors understand the significance of the possibility that the March to October rally was an upward correction in a bear market. The majority of analysts believe that the advance that started from the March lows represented the beginning of a new bull market. I disagree, and I’ve explained in detail why I do not believe March marked the start of a new bull market.

For the sake of argument, let’s just assume that I’m right and that what we’ve seen since March was a bear market rally. If that’s true, we’re in a very dangerous situation. It appears to me that the rally is in the process of topping out. Again, let’s assume that we’ve been in a bear market rally. If the rally is indeed topping out, then the stock market will soon be again in the grip of the bear.

The rally ran from March to October, a period of seven months. In other words, the bear market has been “held back” for a period of over half a year. My thinking is that the bear is “angry” at being held back, and it will probably want to make up for lost time in the period ahead. From everything I see, hear or read, I gather that almost everybody believes the March lows are safe, that they will not be violated, no matter what.

However, if the bear market rally is now in the process of breaking up, my thought is that stocks could decline very rapidly, much faster than most people are prepared for. If late-coming traders suspect that the rally is over, we could see a frenzy to get out of this market. This along with a panic from pros who want to get out with what profits are left.

Source: Dow Theory Letters

http://pragcap.com/richard-russell-this ... rket-rally

[kennynah]

at close to every spx resistance, i will lighten up any +ve delta positions... wait to see what happens at that juncture and then act on it...

factually, historical chart patterns have shown repeated bear rallies after those recession sell offs...

as spc proceeds higher and higher, even if this was not a bear rally, we should always be cautious of pull backs and corrections...

[winston]

I think the Fed is divided and worried about rising gold.

On one hand, rising gold implies inflation, which is what the Fed wants (but not too much of it). But on the other hand, rising gold implies a weakening dollar.

A weakening dollar is OK with the Fed – as long as the weakening dollar does not morph into a collapsing dollar. The Fed is also worried that a weakening dollar will drive the price of bonds lower, meaning rising interest rates.

Remember, the Fed cannot control or manipulate the whole bond market, much as they'd like to.

Source: Richard Russell, Dow Theory Letters

[winston]

Same stuff over and over again...

How a rich investor views gold
From Richard Russell of Dow Theory Letters:

Sophisticated investors are beginning to distrust ALL fiat or central bank-created "money." Moreover, they distrust a situation where central banks all over the world are creating huge additional amounts of their phoney money.

Knowledgeable investors are starting to place all fiat money into a single class. And they distrust that class. They distrust it because they think of it as "junk money gone wild." Their reaction - turn in your junk money for the one type of intrinsic money that has represented wealth for 6000 years - gold.

I've written many times that gold seems to be imbedded into the DNA of mankind. Today, with the world in turmoil, rich men may be saying to themselves, "I don't know what's going on any more, and frankly, I don't know where I'll be in ten years.

But if I own a thousand ounces of gold, I'll know I'm rich. I don't know what the price of gold will be when this whole mess is over, but I know I'll still be wealthy if I own a thousand ounces of gold." And that, to my mind, is some of the thinking behind the rising price of gold and maybe even of stocks.

[winston]

Richard Russell: "The final bear market bottom lies ahead"
From The Pragmatic Capitalist:

A recent article at MarketWatch by Mark Hulbert said Richard Russell was now bullish on the stock market despite just recently saying that the market was in a bear market rally.

Hulbert wrote:
Richard Russell, editor of Dow Theory Letters, is one of the technical analysts who, in light of the joint new highs of both the Dow Industrials and the Dow Transports, are now officially bullish on both the secondary and primary trends of the stock market.

So has Russell flip flopped in just a week? Not even remotely. Although Russell’s short-term indicators are bullish he is still skeptical of the market rally and maintains his position that the market is due for another vicious downturn.

Just yesterday Russell wrote...

http://pragcap.com/has-richard-russell-turned-bullish

[winston]

Why does one need to buy gold ? So what if it's slowly climbing everyday ? All these guys are assuming that the retail players have to buy gold ..

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The great Richard Russell on the bull market in gold
From Richard Russell in Dow Theory Letters:

I think the most interesting action in the current picture is the action of gold. I get the feeling of a ground swell, some irresistible force that is driving gold higher. What's interesting is that there are no wild spikes in gold, no fireworks, but a steady, persistent climb.

This is powerful bull market action, and where it comes from nobody really knows. Is this the buying of millions of Chinese? Or is it the late-entrance of US hedge funds? Or is it short-covering on the part of squeezed COMEX speculators.

In the end, does it matter who's doing the buying? I know this -- most Americans have been brain-washed after many years of anti-gold propaganda. Most Americans don't know anything about gold. Most Americans have not been buying gold. Most Americans don't realize that gold is the time-honored ultimate form of money. So the buying is probably coming from some place other than the US populace.

So far the gold action is coming in via almost measured increases of 3 to 10 dollars a day. It's as if the buyers are waiting for a correction, and when no correction arrives, they say "What the heck" and they buy a quantity of gold, maybe not as much as they'd like, because they keep waiting for that elusive correction.

[winston]

And why must it be either USD or Gold ? Why not Real Estate, Equities, Farmland, Lumber, RMB, AUD, Emerging Market stocks etc ?

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Referring to the bull market in gold, the quote du jour this week comes from Richard Russell, 85-year-old author of the Dow Theory Letters.

He said: “There’s still loads of scepticism about the rising price of gold and the bull market in gold. It’s been so long since the US public (since 1971) realized gold was real Constitutional money that they don’t know what to make of the gold action. They think gold near $1,200 an ounce is expensive and they’d rather have dollar bills.

“I’ve coined the phrase, ‘dollar-bugs’ for these ignorant Americans. I guess they’ll have to get educated the hard way, which means holding on to their fading Federal Reserve Notes, no matter what. As far as I’m concerned, it’s an amazing example of mass brainwashing.

‘Hey, I’d rather have junk paper turned out by the Fed than the real thing - gold.’ Pathetic. And the happy thought is that you can (legally) still swap your junk fiat paper for gold.”

Source: Investment Postcards

[winston]

The great Richard Russell: There is no resistance above gold now
By Richard Russell on 321gold.com:

By now, I believe most of my subscribers have some sort of a position in gold or gold shares.

... most recently, we see a rally and a breakout to the 1200 box. This breakout to new highs is very bullish. There is no technical resistance above gold now. My guess is that gold will now work its way up to 1500 area.

http://www.321gold.com/editorials/russe ... 20309.html

[winston]

The great Richard Russell: Put the Fed out of its misery
From Richard Russell in Dow Theory Letters:

Fed Chairman Ben Bernanke's confirmation hearing comes up today as anger and pressure builds against the Fed. Ironically, the anger does not stem from the Fed's wild increase in Federal Reserve notes (dollars), the anger centers on the Fed's lack of supervision on the big banks.

There's now a powerful effort to subject the Fed to congressional audits and other supervision. In the meantime, the Fed screams that Congress is interfering with the Fed's need for independence.

Russell Suggestion -- Put the Fed out of its misery -- get rid of it once and for all. It's an engine of alternate bubbles, collapses and inflation.