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Richard Russell On Gold

16 December 2009 81 views No CommentEmail This Post Email This Post
Buying and accumulating gold must be seen as a LONG-TERM proposition. I can tell you that gold is going much higher, but I can’t tell you when. I can tell you what to buy — gold bullion coins — but I can’t tell you when it’s going to go into its bubble phase. By the same token, I can tell you that the dollar will go into its “water fall phase,” but I can’t tell you when.
Don’t buy gold to “make a killing.” Buy gold as a permanent store of wealth, and one that can’t go bankrupt. Rich people understand that.
Bull markets eventually come to a boil, but the time of the boiling is never obvious. Apply that thinking to the gold bull market.
China is now the leading gold miner and producer in the world. China is actively encouraging its people to buy and accumulate gold. And I wonder how long it will be before the US government imitates China. Yes, I foresee the time when the US government (as stupid as it’s been, so far) will do a reverse and encourage the American people to buy and accumulate gold.
China, Russia and most of the Asian central banks still have only a small percentage of their reserves in gold. All of these nations want to increase the gold percentage of their reserves. There was an announcement over the weekend that the Russian central bank was adding to its gold reserves.
US mutual funds are now adding small quantities (percentages) of gold to their portfolios. In most cases, the funds are buying gold for insurance. They will hold small quantities of gold over the long term.
Leading spokesmen and oft-quoted men like Warren Buffett and Bill Gross will never mention investing in gold. This is because buying gold is seen as unpatriotic. After all, buying gold implies that you are abandoning the US dollar or at least hedging against dollars and all fiat currency.
The Fed and the Treasury must have some secret strategy for paying off America’s fantastic liabilities (debt) but nobody knows what it is. Many scenarios are now being bandied about and some advisories claim to know “Bernanke’s secret plan.” The unfunded liabilities are now so huge (far above $50 trillion) that rumors of an eventual reneging on our debts are being seriously talked about. After all, the US reneged on settling its debts in gold, much to France’s anger (France was calling in our gold as fast as it could), when President Nixon shut the gold window. The US will no longer part with any of its (our) gold.

Richard Russell, a highly regarded investment newsletter writer has the following to say about the recent gold action:

Buying and accumulating gold must be seen as a LONG-TERM proposition. I can tell you that gold is going much higher, but I can’t tell you when. I can tell you what to buy – gold bullion coins – but I can’t tell you when it’s going to go into its bubble phase. By the same token, I can tell you that the dollar will go into its “water fall phase,” but I can’t tell you when.

Don’t buy gold to “make a killing.” Buy gold as a permanent store of wealth, and one that can’t go bankrupt. Rich people understand that.

Bull markets eventually come to a boil, but the time of the boiling is never obvious. Apply that thinking to the gold bull market.

China is now the leading gold miner and producer in the world. China is actively encouraging its people to buy and accumulate gold. And I wonder how long it will be before the US government imitates China. Yes, I foresee the time when the US government (as stupid as it’s been, so far) will do a reverse and encourage the American people to buy and accumulate gold.

China, Russia and most of the Asian central banks still have only a small percentage of their reserves in gold. All of these nations want to increase the gold percentage of their reserves. There was an announcement over the weekend that the Russian central bank was adding to its gold reserves.

US mutual funds are now adding small quantities (percentages) of gold to their portfolios. In most cases, the funds are buying gold for insurance. They will hold small quantities of gold over the long term.

Leading spokesmen and oft-quoted men like Warren Buffett and Bill Gross will never mention investing in gold. This is because buying gold is seen as unpatriotic. After all, buying gold implies that you are abandoning the US dollar or at least hedging against dollars and all fiat currency.

The Fed and the Treasury must have some secret strategy for paying off America’s fantastic liabilities (debt) but nobody knows what it is. Many scenarios are now being bandied about and some advisories claim to know “Bernanke’s secret plan.” The unfunded liabilities are now so huge (around $100 trillion) that rumors of an eventual reneging on our debts are being seriously talked about. After all, the US reneged on settling its debts in gold, much to France’s anger (France was calling in our gold as fast as it could), when President Nixon shut the gold window. The US will no longer part with any of its (our) gold.

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