America is Bust

Posted by Richard Russell - Dow Theory Letters

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Richard Russell has made his subscribers fortunes. One of the best values anywhere in the financial world at only a $300 subscription to get his DAILY report for a year. HERE to subscribe. Amongst his achievements Richard was in cash before the 2008/2009 Crash and he has been Bullish Gold since below $300


From what I read and from what I hear and from what I see, everybody needs one of two items — or maybe both. The first most needed item is a job that pays them a living wage. The second most needed item is cash. Lately, I’ve been besieged by people I know or I know only slightly, and they all have something to sell me — a used car, a house, an emerald, a battered diamond, an idea for a new business.

This leads me to the inevitable conclusion — America is bust. And most of its people are broke and in dire need of cash.

This week’s Barron’s is unusually interesting. An article appears in this venerable publication that suggests that readers invest “as much as 5%” of their assets in gold.” Never in the article is the suggestion that one owns gold as protection against a sinking dollar. The reason given is that nobody knows what lies ahead, and the reason you own gold is for all-around insurance against deflation or inflation. It’s as if daring to suggest that the dollar may fall is treasonous, yet statistics and charts show that gold (now at a record high) moves inversely to the dollar. As the dollar fades, gold rises.

Gold is the time-honored standard of value. The true value of gold doesn’t change — the value of everything else changes in relation to gold.

To talk about the future of gold, one must talk about the future of the dollar. The US is now being run by Keynesians. Their strategy is to spend and print and borrow the nation out of trouble.

The one member of Barron’s staff who understands money and gold is Editor-in-chief Randall Forsyth. In a second and smaller article this week entitled “Gold’s Glimmer Grows,” Editor Forsyth notes that “it’s apparent that the dollar is in retreat on all fronts. Adding to the pressure is increasing speculation that the Fed could resume expanding its balance sheet as soon as the September 21 meeting of the policy-setting Federal Open Market Committee.”

Russell Comment — The unemployment statistics continue to look dismal. In official economic strategy, politics has a habit of prevailing. Thus I am reasonably certain that the next move by the Fed will be to return to “quantitative easing,” better know as printing money. The result will be a declining dollar, a process that escapes the radar of most Americans.

A declining dollar may not register in the minds of most Americans, but it certainly waves a red flag in front of the keepers of monetary reserves of overseas nations. Their reaction is to reduce the mix of US dollar denominated securities in their country’s reserves, meaning to get rid of their dollar reserves by buying assets, often real estate or businesses in Africa, Australia, South America and the United States..

“America is for sale,” and I see it in the daily tally of real estate sales in San Diego County. And why not? San Diego has some of the best weather on the planet, it has great medical facilities, and it has miles of beaches and a great harbor. Where else can you buy a house that’s a five minute walk from the beach for less than $1.5 million?


Richard Russell has made his subscribers fortunes. One of the best values anywhere in the financial world at only a $300 subscription to get his DAILY report for a year. HERE to subscribe. Richard  has been Bullish Gold since below $300. He also loaded up on bonds in the early 80’s when US Treasuries where yielding 18%+. A 30 year bonds through compound interest would turn $1,000 into $300,000 at maturity. (include reinvestment of interest income, which Richard does as his view is compounding interest is the ROYAL ROAD to RICHES)