The Real Horror: To be short Gold this morning

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

Update: 2pm PST: “Dec. gold closed only a dollar off its high for the day. All precious metal items surged. I was particularly impressed by GDXJ, up 2.90 to 39.93. The junior golds are popping, which is bullish.

The real horror — to be short gold this morning at the opening. Or silver or platinum, for that matter.”


We’re now at one of those rare junctions where, as in Hollywood, “nobody knows anything.” Some of the smartest people in the nation are hold opposite opinions regarding the markets and the economy and the future.

My own opinion regarding the markets is that the test of values trumps all other considerations. And as I see it, stocks and bonds are at historical extremes of over-valuations. History will look back on today’s stocks and bond as being in bubbles.

That’s the reason why I don’t want my subscribers to be in stocks or bonds. I see a dim future in both. You buy anything when it’s overvalued, and you’re asking for future pain.

I continue to believe gold is somewhere in the midst of a great bull market. Those who claim that gold is in a bubble just don’t know what they are talking about. Gold is the immutable standard. Gold’s price never changes. Everything else changes in value when compared with gold.

When I was a boy, one could buy an ounce of gold for 22 dollars. Now it requires over 1400 dollars to buy the same one-ounce of gold. What has changed? The real change is that it takes one hell of a lot more “dollars” today to buy the same one-ounce of gold. What has really happened is that the purchasing power of the dollar has crashed. If you can’t understand that, you don’t understand what is going on. And you certainly don’t understand the fundamentals of gold.

Knowledgeable and sophisticated men and women collect gold. They know that when, or if, everything else collapses in price, gold will still represent wealth. Those who can’t understand this (and there are thousands of otherwise intelligent people who don’t understand what I’m writing) will never understand gold. It’s a simple and logical concept. But simplicity often befuddles the best minds.

Gold opened down 23 dollars today. I checked it out on the daily chart, and I note that no rising trendlines have been violated yet. RSI is turning bullish. Gold remains in its bullish trend. We’ll see if the “Asian put” is still in effect.