The following is an excerpt from Richard Russell's Dow Theory Letter, February 11, 2009: By Richard Russell, Dow Theory Letters
“There’s only one item that is bought through both fear and greed. That item is gold. Are you worried about the viability of the dollar? Then buy gold - (fear). Are you afraid that the gold market is getting away from you? Then don’t wait - buy gold (greed).
“Those subscribers who have heeded my advice - ‘buy gold’. They are doing OK today. Of course, for years I advocated buying gold coins and hiding them away and never looking at them or thinking of selling those little beauties. Now if you want gold, you have to buy ‘paper gold’ in the form of GLD. Which is probably OK. Below we see an up-dated chart of GLD. And we see the breakout today at 92.29. This completes a huge base, which started at the 69 box and since has been building and building.
“Today, with the upside breakout at the 93 box on the P&F chart, we’re forced to buy gold in the 944 (April futures) area. For those who missed out on gold when it was in the 700s and 800s, this is a scary proposition. So question - is it too late to buy GLD or high-premium coins if you can find them? As I see it, the frenzy, the speculative phase of gold, the rush of a frightened public lies ahead.
“Big bull markets always find a way to keep you frightened and OUT. Big bull markets are devils with no conscience - to get in you have to ‘close your eyes, and just do it’. Not easy, but in this business nothing is easy except losing money. ‘There’s no fever like gold fever.’ And I’m beginning, just beginning, to feel the fever now. When I look at the chart below, I can sense the fever rising.”
Source: Richard Russell, Dow Theory Letters, February 11, 2009.
Hat tip: Investment Postcards
I disagree 100%. Forget Gold and buy Oil.
Oil is a hedge against calamity, dollar depreciation, recession and depression, and can be consumed, sold easily and not confiscated.
I believe that China's recent decision to allow its citizens to hold gold and silver has a hidden agenda, namely, to confiscate the same, once "critical mass" has been attained within its borders.
That, in turn, will be followed by backing the yuan with gold and turning it into a true reserve currency.
What are our leaders doing about this?
There isn't enough physical gold in existence to accomplish that, and China doesn't yet have the faith of its own populace, let alone the world to divorce the US, without it being a volatile proposition; something they are not prepared to try just yet. Instead, it's more likely that China will take a long term gradual approach. In the meantime, that means that China will keep buying US treasuries in order to keep its export dependent economy recovering.