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The Waiting Game

Richard Russell snippet
Dow Theory Letters
August 16, 2004

Extracted from the August 13, 2004 edition of Richard's Remarks

Gold -- I wrote a lot about the gold situation yesterday. And I want subscribers to remember that when we hold gold or gold shares we're playing "the waiting game." The US and its overseas friends are also playing a game. Americans have a secret name for this game. It's called -- "We pretend to pay you with our worthless paper dollars, and you send us your goods and pretend that you're being paid."

So why do China and the Asians continue this basically idiotic, losing game -- are they just stupid? No, they're not stupid, they simply want to continue selling their goods to the US. You see, the leaders of China and Asia have a problem. It's called keeping the masses employed. The Asian leaders' problem is to see that hundreds of millions of their people have jobs. China, for instance, has TEN million people coming into the work-force every year. If these people can't get jobs, well, there's always the possibility of revolution.

So the game goes on. It will go on until the US sinks under an ocean of liabilities and debts and our foreign "partners" will no longer accept dollars. But no one knows exactly when that time will come. Next month, next year, three years from now? The signal for the fall could be a collapsing dollar. Or maybe we're getting the first hints of the fall now -- with the stock market heading down along with the dollar (the dollar got whacked big time today).

The smart boys like Warren Buffett see the writing on the wall, and they have taken a multi-billion dollar position in foreign currencies. But foreign currencies are still junk paper, they're just better-quality junk than the dollar. In the end, the only time-tested, intrinsic money is gold. But as I said, when you hold gold or gold shares you're going to be right in the end -- but you're also playing "the waiting game." And waiting can be difficult, it can on occasions be scary, and it can certainly try your patience.

This is what the central banking system has done to us. This is what the Federal Reserve is all about. This is the potential disaster that the paper money system has inflicted on all of us. My wise old father used to tell me during the Great Depression, "Dick," he'd say, "the only thing you can depend on in this world is a good education and what's between your ears." I've told my own kids the same thing. It's the God's honest truth.

Richard Russell
Dow Theory Letters

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