 Let the second
phase begin
Richard Russell
snippet
Dow Theory Letters
November 16, 2004
Extracted
from the Nov 15th, 2004 edition of Richard's Remarks
Today it isn't
a question of how much paper money there is in the world or how
much gold is being mined. The question is how much distrust there
is in the dollar and in paper money in general -- the real question
is how willing are knowledgeable investors and US creditors to
hold dollars? Call it "escape from the dollar," call
it "diversification," call it anything you
want, but money is starting to flow into gold.
I'm going to
revise my thinking on the phase gold is in. I've stated that
gold is still in its first psychological phase. I've revised
my thinking on that. Often the first and second phase of a bull
market is divided by a severe correction. I believe that the
July 2004 correction was the correction that ended the first
psychological phase of gold, and that we are now in the second
psychological phase.
The second
phase of a bull market is usually the longest (in duration) phase.
It's in the second phase that the public begins to be interested
in an item. And it's in the second phase that the funds start
to take their initial positions in an item. I believe we're at
the start of the second phase in gold. The sharp July
correction followed by a second correction in August -- these
two corrections, served, I believe, to knock out late-comers
and "in-and-out traders" and solidify the technical
position in gold. Only the "believers" held on, and
in many cases bought more.
All of which
takes us to the second psychological phase of gold.
Let the second phase begin.
more follows for subscribers
. . .
Richard Russell
Dow Theory
Letters
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