Richard Russell 01 (May 08 - Dec 14)

[-dol-]

This can be interpreted as either bullish or bearish.

[iam802]

I am quoting this off another article. Can't find the original article from Richard Russell on this.

“My opinion is that the Bernanke Fed is becoming progressively more uncomfortable with the way the economy is going, and they are getting ready to pull out their "big anti-deflationary guns" in another attempt to pre-empt deflation. The anti-deflation "guns" that the Fed manages are zero short rates, buying longer-term bonds and speeding up the money "printing presses." I believe the stock and bond markets already sense all of the above. Thus the stock market is dancing to the money printing tunes, and the Treasury bonds are backing off. The dollar has been weak as it senses the coming avalanche of new dollars. Gold is still reacting to the late deflationary forces.”

[winston]

Richard Russell Slams Robert Prechter, Praises Gold, Tells Readers To Get Out Of Stocks by Tyler Durden


Richard Russell tells readers how he really feels. And, yes, the bear slams everything fiat and tells readers to leave stocks and go into gold.

The specter of deflation is cropping up in many media outlets today. In fact, I'd say that deflation talk has almost become popular. The key question is this -- Fed Chief Bernanke is obviously reading and hearing all about the "coming deflation." What will Bernanke do about it?

I think he will fight deflation with all the weapons at his command. And Bennie has a lot of weapons, least of which is printing "money."

...Then (believe it or not) in the same issue of Barron's we see an article by my old friend, Robert Prechter, the guru of the Elliott Wave thesis. Robert explains how a great contraction in credit and debt will bring about deflation. Robert notes that the amount of dollar-denominated debt worldwide is some $57 trillion. . . The already-issued debt and potential debt is poised to overwhelm the possibility of management monetization. The Fed's assets amount to $2.3 trillion, a drop in the global debt bucket."

Robert concludes his frightening article as follows -- "If you are positioned for more inflation -- as the vast majority of investors are -- you are likely to find yourself on the wrong side of the monetary bet. Positioning for deflation simply means avoiding traditional investments, especially risky debt, and maintaining maximum safety in cash equivalents, held in the safest institutions. If you shed market and institutional risk, you can sail through deflationary times unscathed."

Russell Comment -- Whew, how's that for a scary contrary opinion? Robert believes that way to safety in a deflation is to have cash, and lots of it. My concern with this approach is that I question the safety of the US dollar (and all fiat money, for that matter). So in an all-out deflation, Robert Prechter will be sitting in all cash or US Federal Reserve notes.

But the dollar is collapsing, and with a US that is deflating, none of our foreign creditors will want dollars (in fact, they will be trying to get rid of dollars). With fiat money in retreat all over the world -- and currencies devaluing against each other, the world's peoples will turn to the only money they can trust -- gold. I'm aware that Prechter believes gold will be heading down in a deflation, I disagree.

I was there during the Great Depression, and I can tell you nobody at that time had dollars. But if you did have dollars they were trusted and they were considered as good as gold. Today, it's different. The very validity of the dollar is in question.

...I distrust all scenarios and predictions, although I read 'em all and find many of them fascinating. In the end, I only trust the wisdom of the stock market. I haven't liked the recent action of the stock market, and I've advised my subscribers to get out of stocks.

Courtesy of King World News.

http://www.zerohedge.com/article/richar ... ent-515064

[winston]

Have not seen this guy in my Inbox for a long time. And when he appeared what else does he have to say ?

Richard Russell: "Gold fever" is coming
From Richard Russell in Dow Theory Letters:

... The world no longer trusts the dollar. Yet, the U.S. dollar is part of every nation's reserves. The dollar is now flirting with its recent low, and by the time you receive today's site, the dollar may have sagged to a new low.

With the dollar sinking, the loss of purchasing power among Americans is both frightening and tragic. Meanwhile, gold continues to climb to new record highs. So far, the new highs in the great gold bull market mean nothing to the average American. This surely cannot go on so quietly and subtly.

As commodity prices rise, Americans will slowly "get it." Even the media will get it, and the secret of the decline in our purchasing will be out. The Fed's idiotic "core inflation" statistics will be scorned, and the real story will emerge.

This will lead to the third speculative phase of the gold bull market. "Gold fever" will break out, and we'll know that the Fed's immoral and evil game has ended.

[iam802]

A Dow Theory buy signal?

http://www.marketwatch.com/story/dow-th ... _news_stmp

CHAPEL HILL, NC (MarketWatch) — Not to be left out of today’s burst of optimism on Wall Street, the venerable Dow Theory is close to issuing a buy signal.

That’s because, assuming the stock market holds onto its mid-day gains, both the Dow Jones Industrial Average (DOW:DJIA) and the S&P 500 index (MARKET:SPX) will close above their rally highs set on Aug. 9.

If they do, that will constitute a buy signal according to TheDowTheory.com, edited by Jack Schannep. The crucial levels to watch, on his interpretation, are 10,698.75 for the Industrials and 1,127.59 for the S&P 500.

Traditionalists might wonder what the S&P 500 has to do with the Dow Theory, since it traditionally has been based on the action of the two major Dow averages: The Industrials and the Dow Jones Transportation Average (DOW:DJT) . But, according to Schannep’s re-interpretation of the Dow Theory, a Dow Theory buy signal can be triggered whenever two of these three indexes surpass previous significant rally highs.

Richard Russell, editor of Dow Theory Letters, adheres to a more strict interpretation of the Dow Theory, and is therefore not quite ready to say that even a short-term buy signal has been generated. That’s because the Dow Transports as of mid-day trading in New York remain about 1% below their early August high (which came in at 4,516.35).

The third Dow Theory service tracked by the Hulbert Financial Digest is Dow Theory Forecasts, edited by Richard Moroney. On his interpretation, which is different than that of both Schannep and Russell, the two Dow averages must surpass their mid April highs to trigger a buy signal. Those levels, which remain some way off, are 11,205.03 for the Industrials and 4,806.01 for the Transports.

-- Mark Hulbert

[winston]

Gold is guaranteed to win

Subscribers must wonder why I am so adamantly opposed (as were the Founding Fathers) to fiat money. For me, it's a moral issue.

Look, you work your entire life, and the total amount of money you earn is two million. The Fed creates a billion dollars through its machinations: No risk, no sweat, no planning, no patents, no brain-storming, They just create the money out of nothing.

... Gold is honest money, obtained by the sweat, the risking, the planning, the financing of men. Ultimately, gold must win and fiat money must lose. Every fiat money in history has gone down the drain. This is a concept that the "dollar bugs" will have to face.

The rising price of gold tells me that the scale is slowly but surely tipping away from money by fiat – towards intrinsic, Constitutional money – gold.

Source: Dow Theory Letters

[winston]

This is "the greatest fraud ever perpetrated on the American public"

I've been predicting the death of money by fiat.

Fiat money, created at will and in any quantity be central banks, is the greatest fraud ever perpetrated on the American public.

Compared with the Fed, Madoff was an amateur. Madoff hurt a small group of greedy people. The Fed has cheated generation after generation of Americans.

Russell prediction – The Fed and money by fiat are doomed.

Surging gold is telling us, "It's payback time." Greenspan understood gold, but turned liar and traitor. I don't think Bernanke even understands gold.


Source: Dow Theory Letters:

[winston]

Richard Russell: Speculative Phase Of Gold Bull Lies Ahead

Richard Russell is not only the preeminent expert on Dow Theory, he is one of the most prolific newsletter writers (Dow Theory Letters) and thanks to his epic longevity, will hopefully go one to break records for many years to come.

The “Oracle of the Dow” is not omniscient, unfortunately. Otherwise, we mere mortals would simply follow his sage advice to riches.

He was definitely in fine form in the summer of 2000 when he prophesied that “we’re in the first phase of a bear market that could be long, tedious, grinding and very painful. Before it’s over, I believe we’ll see big pools of money moving out of stocks and into cash.”

But since then Russell has had an especially tough time with deciphering the stock market. Especially so these past few years. He was bearish for some time but then in May 2007 Russell switched to the bullish camp and pronounced that “an unprecedented world boom lies ahead.”

It would seem that Russell has basically given up on trying to time the market’s gyrations, writing recently that “the stock market is too unsettled, too questionable, for me or my subscribers to assume an all-out bullish or bearish position.”

But he continues to be an unabashed gold bull. This is the one market he has been pounding the table about for quite a long time and he has been absolutely correct. To my chagrin, it took me far far too long to realize that gold is indeed in a secular gold bull market. And of course, the next thought after that is the dread that it will be soon over.

Russell puts those thoughts to rest writing recently:

“I’m going on the thesis that the highly speculative phase of the gold bull market lies ahead. Now I’m depending on my experience with other bull markets:

Most great bull markets go higher and further than almost anybody thinks possible.
Most bull markets progress in three psychological phases.

I believe the first phase of the gold bull market has passed. It’s over. This is the phase where students of great values take their initial positions.

I believe we are deep into the second phase of the gold bull market. This is the phase where the institutions and funds join in the bull market show.

Often, more money is made in the third or speculative phase of a bull market than is made in the first and second phases combined. This can mean that the late-comers to bull markets often make a fortune, more than those who had the courage to buy early in the game, but they have to have fortitude to sit in the highly volatile second/third phases.

Obviously, I could be wrong, but I believe that gold and silver are both still a buy.

I’ve said this before, but I’ll repeat it. You do not trade in-and-out in a confirmed primary bull market. You take an early position and add to your position as the bull market progresses.

Great bull markets don’t usually provide marvelous entry points. Those who are waiting for the ideal or “safe” place to enter the bull market in precious metals may have a long and frustrating wait.

In a great primary bull market, you just “shut your eyes and buy.”

Are you buying right or are you buying wrong? Great bull markets tend to bail you out of your mistakes. Perfect timing is nearly impossible in a great bull market. You’re either in or you’re out.

Great or fabulous primary bull markets may come along once or maybe twice in a generation. I believe the bull market in precious metals is just such a one — a once-in-a-generation bull market. We may never see another one to match this one in our lifetimes.

I started writing Dow Theory Letters 52 years ago in 1958. Three times I’ve staked my reputation and my business on a bullish market call. The first instance was in 1958, when I told my subscribers that the third phase of the bull market lay ahead, and it was time to load up on stocks.

I said so in my first Barron’s article. That call and that article put me in business. I thank Barron’s late, great editor Bob Bleiberg (who had faith in me and went out on a limb for me).

In late-1974 at the end of that horrendous bear market, I told my subscribers that I thought the bear market was over, and it was time to buy stocks.

In the year 2000 I told subscribers that I thought the bear market in gold was over, and that it was time to buy what was left of the gold stocks and “put ‘em away.” I told my subscribers that we should treat the gold shares (many under five dollars) as perpetual warrants. “Buy ‘em and forget them.”

Lucky thirteen. I’m confirming what I said in 2000. Buy gold and silver, put ‘em away and sit tight. The great speculative phase of the precious metals bull market lies ahead. My advice is concentrated in four words — Buy, and be patient.”

Looking at the very long term chart of gold, the base at the millennium is apparent, as is the unrelenting march of the secular bull market. While it does deviate from time to time away from the long term trend, it quickly returns to it.

Right now we are above the trend but not at an extreme point that has historically lead to regression to the mean:

Currently the price of gold is trading at 16.3% premium relative to its 200 day moving average. Historically tops have corresponded with a premium of 20%+ so we still have some room the upside in this most recent cycle.

And as Russell so eloquently puts it, quite a ways still from the “highly speculative phase”.


http://www.tradersnarrative.com/richard ... -5022.html

[winston]

Richard Russell: Markets In Danger Of Shuddering, Tilting And Falling Over
By Prieur du Plessis

Russell, like any investor, has not always been right with his market forecasts. While he has been dead wrong on equity markets for most of the bull market since March last year, he has been one of the few commentators who have been spot on with their predictions of the great bull market in gold right from the starting blocks in 2001.

The gold price in US dollars has risen from $250 at the beginning of 2001 to $1 345 today. This represents an incredible return of 438% (or 20.6% on an annual basis) over this time period. Had you invested your money in global equities, as represented by the MSCI World Index, over the same period, with dividends reinvested, your investment would have shown a paltry return of 25%, or 2.3% annualized.

Russell is of the opinion that the bull market in gold still has a considerable way to go. His view is based on his distrust of the fiat dollar. He believes the US Federal Reserve’s strategy of printing dollars to get the economy out of trouble is going to have disastrous consequences for the dollar and eventually the US economy, and that gold will be one of the few “currencies” that will retain their value.

And what does Russell have to say about the U.S. stock market currently? He does not paint a very pretty picture. Russell says: “Right now, we’re seeing the results of a bubble in Fed-created liquidity. When the water continues to pour into a bath-tub, everything – the rubber ducks, the plastic boats, the soap bars – float up with the water line. This goes on until either the water flows over the tub and onto the floor – or mom comes in and pulls the plug.

“I think that’s what we’re experiencing now in the markets. Everything tradeable − stocks, bonds, gold, silver, commodities in general – is rising. I call it an all-around mega-bubble. It will continue until someone, purposely, or by mistake, pulls the plug.

“There are only two items that seem immune to the surging liquidity: home prices and unemployment. But there’s another possibility. Build a tower out of children’s blocks. You can build that tower just so high, and at some point the last block is too much. The tower shudders, it tilts and falls over.”

While I am not quite as negative on the prospects for equities over the longer term, I am very aware of the risks that still prevail and the possibility of a further correction. However, I do agree with Russell about the long-term bull market in gold not being over yet.

http://www.dailymarkets.com/stock/2010/ ... ling-over/

[winston]

Richard Russell: “Stocks Are Not Priced To Produce Profits Over Coming Years”
By Prieur du Plessis

In a recent article, Richard Russell, 86-year-old writer of the Dow Theory Letters, focused on dividend yield as a valuation yardstick. I thought it appropriate to share some of his views with you.

In order for readers to follow Mr Russell’s discussion, I include a chart of the S&P 500’s dividend yield going back to 1871. He refers to the Dow but I unfortunately do not have a long-term chart of the Dow’s dividend yield and therefore use the S&P 500’s dividend yield to illustrate the trend.

Over to the R man.

“Today we hear a lot about dividend yields and stock income. I’m looking at a table of the Dow covering the years 1896 to 2008. The table lists the Dow’s price around each year’s close, plus book value, earnings for the Dow, price/earnings, dividends and dividend yield.

“In the ’old days’ (this was a few years after the Depression) we thought in terms of basic value. Real value was when a stock was selling at ten times earnings and providing a dividend yield of around 6% or better. And, believe me, there were plenty of such values for sale.

“Glancing over my stock tables, during the bottom of the Great Depression (1932: 0.00 N/A N/A) the yield on the Dow was juicy, but investors at the time were either frightened or bearish, and only the bravest were in there picking up bargains.

In 1931, one year before the extreme low, the Dividend yield on the Dow was 10.7.8%. In 1932, with the Dow at 41.22, the dividend yield was 7.71%. In 1933 it was 5.40%.

“The Dow recovered dramatically after 1932 (a new bull market had started), and by 1936 the dividend yield on the Dow had shrunk to 3.92%.

In 1937 the 1932-37 bull market hit its high, only to be followed by a long, tortuous bear market that hit bottom in June 1949.

At the 1949 bear market low, the Dow dividend yield rose to 6.49%, and stocks were again on the bargain table.

“A new bull market started in June 1949, and by 1959 the Dow yield had shrunk to 3.05%. A long and convoluted bear market followed, and by 1981 the Dow dividend yield had risen to 6.42%.

“The rest of the story is modern history. A great bull market started from 1980-82 and as stock rose, the dividend yield on the Dow shrank. By 1994 the Dow dividend yield dropped below 3% to 2.65%.

In 1998 the Dow dividend yield dropped below 2% to 1.72%. In 1999 the Dow dividend yield was at a dangerous 1.47%.

“The Dow then corrected sharply into 2003, and then rallied to a peak in 2007, at which time the dividend yield was still at a low 2.25%.

“From the 2009 low, the Dow rallied again, and as I write the dividend yield on the Dow is 2.56%. I go along with Charles Dow’s ’rule’ − a dividend yield under 3.5% is risky if not dangerous.

“Based on history and based on the current dividend yield, stocks are not now priced to produce profits over coming years.”

http://www.dailymarkets.com/stock/2010/ ... %e2%80%9d/