'Fabulous Gold'
Lecture
Richard Russell snippet
Dow Theory Letters
Oct 15, 2010
October 14, 2010
-- "Buy 'em right, and your futures' bright, buy 'em wrong,
and your money'll be gone."
Question
-- Russell, you bought gold early around the year 2000, and you've
stuck with gold and gold items ever since. What made you so sure
that gold was the royal road to riches?
Answer
-- Around 1999 and 2000 gold was selling at just above 260 an
ounce. But more important, many well-known gold shares were selling
like second-hand rain coats. These formerly much-loved gold shares
were selling at such low or bargain prices that I thought one
could buy thousands of shares and just "put 'em away"
and forget about them. I knew gold wasn't going out of style,
and it was just a matter of time before interest in gold returned,
as it has in all history.
Great bull markets start with stocks
selling "below known values." That's where gold mining
shares were selling around 1999 and 2000. I equated gold shares
in the year 2000 with the Dow in June of 1949 at a time when the
Dow was priced at 161. In the year 2000, I thought to myself,
"Could this be the very beginning of a great bull market
in gold, a bull market that could ultimately take gold above
its January 1980 peak price of 850? That idea stuck in my head;
in fact I became obsessed with the idea that a great bull market
was beginning and very few people even suspected that was happening
in gold.
Question
-- OK, Russell, gold is now well above its peak price of 850
struck in 1980. So what do you expect next?
Answer
-- I went through this same phenomenon in the 1960s with the
stock market. We went through the correction of 1953, and we
staggered through the vicious correction of 1957. In 1957 a severe
recession enveloped the US economy, and almost everybody was
convinced that the bull market that had started in 1949 had ended.
I learned from George Schaefer that big
bull markets almost always end with a speculative explosion.
We had not seen that kind of action in the bull market that started
in June, 1949. I was convinced that a speculative third phase
of the bull market lay somewhere ahead. For that reason I was
convinced that the bull market was not over.
In fact, I was so sure of my stand that
I wrote an article that was published in Barron's (December,
1958) in which I made the case for a coming final boom phase
in the stock market. That article drew a great amount of interest,
and it put me in business. A speculative third phase did appear
in the stock market during 1956 through the early '60s.
Today I am taking the same stand regarding
the gold bull market. The gold bull market will not end with
a fizzle and a whimper. It will end with intense speculation
and widespread interest from the funds and the public. We haven't
seen that kind of activity yet, but I'm convinced that a period
of wild speculation in gold lies somewhere ahead.
This is why I continue to beg my subscribers
to load up with gold. As I see it, we are nearing a period of
intense speculation that will be beyond anything seen before
by the last three generations of Americans. Ironically, more
money [will be] made in the final explosion in gold than was
made during the first two phases combined.
Great bull market are seen maybe once
or twice in a lifetime. The current "stealth" gold
bull market has sneaked up on most Americans. The very phrase,
"gold bull market" is sneered at by most analysts today.
In fact, most of the comments on gold today come in the form
of warnings; "Gold is too high." "Gold is in a
bubble." "Gold will sink back below 1000." "Gold
is a fool's play."
Nonsense. Gold is moving ever-closer
to its climactic speculative third phase. The negative
comments about gold will only serve to make the gold bull market
that much stronger. In this business, there is nothing more powerful
than a primary bull market that has been denigrated, spat at,
and held back for years.
And that's the end of my "lecture"
about the fabulous gold bull market.
Below, the profile of one of history's
greatest primary bull markets (and it's not finished yet).
###
Richard Russell
website: Dow
Theory Letters
email: Dow Theory Letters
Russell Archives
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