Hang on to your gold coins

Richard Russell snippet
Dow Theory Letters
Oct 8, 2008

October 7: I've suggested over and over that subscribers move to cash (T-bills and T-notes) and gold bullion. As for gold, I prefer one-ounce gold coins held in your possession in your bank vault. I prefer the actual possession of gold to a piece of paper stating that you own a certain number of ounces of gold. I do not expect the US government (as per 1933) to call in all privately-held gold, but it would not surprise me to see the US government halt all trading in gold.

Why would the government do that? Gold is the enemy of fiat paper, and the Fed is going to print one hell of a lot of Federal Reserve Notes. The coming deficits will be staggering, and ultimately our overseas creditors may insist on partaking of our gold hoard (as did DeGaulle) rather than accepting an endless amount of fiat paper, which can be created "out of thin air" by the Federal Reserve. I see a coming battle of fiat paper vs. gold in the future, and gold (real Constitutional money) will be the winner.

Gold -- I see only two safe havens in this bear market. The first is Treasury bills which are dependent on the viability of the US dollar. Should a run on the dollar occur, the back-up would be the only money which is not debt-created money -- gold. Thus, a portfolio of say 80% T-bills or T-notes and 20% gold coins seems to me to be our best protection against the bear and the stupidity of government.

Below we see a weekly chart of gold. MACD appears to have bottomed and is now heading higher. The blue stochastics are about to enter positive territory above zero.

Gold is pressing against the 50-week moving average which now stands at 882. Dec. gold was at 886 this morning (Tues) before the opening of the market.

Hang on to your coins.

Richard Russell
website: Dow Theory Letters
email: Dow Theory Letters
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