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All-fired hot...

Richard Russell snippet
Dow Theory Letters
May 3, 2010

Question -- OK, Russell, then why are you so all-fired hot about gold and gold mining shares?

Answer -- The only bull market I trust now is the bull market in gold. Actually, a gold bull market is a misnomer. Gold is the time-honored stable item. The price of everything changes against gold. A bull market in gold is really a bear market in currencies, in which it requires a greater quantity of a given currency to buy an ounce of gold.

For instance, back in 1970 it took 35 dollars to buy a one-ounce gold coin. Today if you want to buy an American gold eagle, it will cost you over 1200 junk fiat dollars. Thus, gold costs a lot more today in terms of dollars than it did 38 years ago. And that's what we call a bull market in gold.

Today there are doubts about some sovereign money such as Greece's money and Portugal's money and Spain's money. As I write the US dollar is considered the safe-haven of fiat currency. But US debt is running far ahead of GDP, and the US debt to GDP is horrendous. And gold accumulators don't want to be in US dollars when suspicions turn to "how good is the Yankee dollar in view of the US's trillions of dollars of debt?"

Right now Greece is being forced to adopt draconian measures. When Greek citizens see what they have to sacrifice and go through, they are rioting. What will Americans do when taxes are raised and their medical choices are dictated by the government, and their garbage collection is cut to once a month?

My son, Ryan, is building a self-sustaining farm in Northern California. When he told me that this is what he wanted to do (for educational purposes) I thought he had lost his marbles. I don't think that any more. In fact the way the world and California are going, it would not shock me if Faye and I had to move up with Ryan one of these days.

At any rate, what I'd like subscribers to get out of today's site is the following -- money is made in the buying (when the P/E ratio for the S&P is 6 or below). And money is lost in the buying (when the P/E ratio for the S&P is over 20).


The great stealth bull market in gold continues. Stealth? Yes, test... ask anyone you know - including your own stock broker - what the price of gold is. Odds are that they don't have a clue.

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

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