Richard Russell On Gold
Gold -- This most interesting chart below is from BullandBearWise. The black line follows gold from 1975 through 1980 and a few years beyond. Note that gold accelerated upwards starting in late-1978, and by 1979 gold was rising almost vertically in a parabolic pattern. In other words, during 1979 gold was literally "blowing its top" in a vertical rise.
The red line tracks gold during a comparable period during the present gold bull market. Note that unlike 1979, gold has been rising gradually and systematically. There are no signs yet of acceleration or a parabolic (vertical) rise. Ultimately, I believe there is a chance that gold will go into a parabolic rise, but that may take place a year or many years into the future.
It takes insistent and then frantic buying to create a parabolic rise. I don't see any signs of that kind of buying now. In fact, I just asked one of my friends at a very large brokerage house, "Fred, do any of your clients have large positions in gold?" He thought for a minute and answered, "Nope, I don't have any clients with large gold positions. Why, do you think they should have big gold positions?"
Then I asked by local dealer whether he was received any rush for gold coins. His answer, "No, there's no pick up in new accounts. Just the regulars are calling in orders for additional coins."
My conclusion -- Most Americans haven't the slightest idea of what's happening to gold, and they certainly don't own any gold. As for any excitement, right now it's centered in football and basketball, not in gold.
Below we see a P&F chart of the crashing Dow-to-gold ratio. When you compare the Dow to gold, it's obvious that stocks are losing out to gold, the 5000-year "wealth-standard" against which everything else is measured.
Richard Russell
Editor-in-chief - DOW THEORY LETTERS
http://ww2.dowtheoryletters.com
November 27, 2007
The inimitable and venerable Mr. Russell gained wide recognition via a series of over 30 Dow Theory and technical articles that he wrote for Barron's during the late-'50s through the '90s. Through Barron's and via word of mouth, he gained a wide following. Russell was the first (in 1960) to recommend gold stocks. He called the top of the 1949-'66 bull market. And almost to the day he called the bottom of the great 1972-'74 bear market, and the beginning of the great bull market which started in December 1974.
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