With gold and silver on the move, the Godfather of newsletter writers Richard Russell had this to say in his latest commentary, “There is only one certainty regarding paper money -- the longer you hold it, the less it will buy in terms of real goods or real money -- gold. But there's a big difference between the current precious metals bull market and the bull market of the 1970s. The 1970 bull market drew tremendous interest (I was there). Everybody I knew (even the gold haters) were watching that bull market with keen interest, particularly during the wild "blow off" days of the late 1970s, when silver was rocketing higher -- rising every day by limit up.”
“In comparison, today's huge precious metal bull market is greeted with yawns, that is, if it is greeted at all. I've been calling the current gold/silver market the "great stealth bull market." Ask the average man or woman on the street what's happening to precious metals, and they'll give you a blank stare and maybe a "Duh." Ask them if they own any gold or silver, and they'll give you a sheepish "Nah."
Gold (April) closed on March 2 at 1437.40, a record high. On March 9 silver closed at 36.04, highest since 1981. Yesterday both marks were bettered. Where's the excitement, where's the interest, where are the articles in the newspapers?
Time to study the chart (above). As I've been saying, gold in its advance has periodically tested its 150-day moving average over the past few years (150-day MA is shown as the blue line on the chart). Note that on the most recent "correction," gold didn't even test its 150-day MA. When I saw this, I realized how powerful the forces under gold were.
Gold is now "out in the open" with no overhead resistance and no overhead supply. So far the bull market advance since 1999 has been steady, quiet, and orderly. Except for its spectacular slow and relentless climb, there's been no excitement in the gold bull market.
I don't think this is going to continue. Some where ahead the precious metals bull market is going to turn wild and speculative. Only one phenomenon will serve to create this excitement. That phenomenon is HIGHER PRICES. The public can resist anything in markets except steadily rising prices.
As for steady higher prices and excitement, I suspect that silver is about there. As for gold, maybe not yet. But somewhere ahead gold is going to catch fire. That will be the time when the great American public will decide that they have to have some gold, maybe just a coin or two, or maybe just a few shares of GLD -- but that time is coming.”
Richard Russell is correct, a mania lies somewhere ahead and the public will be heavily engaged in the gold and silver markets. The question is will this gold and silver bull market dwarf the one from the 70’s? Time will tell, but for now just sit back and enjoy the ride.
Link is here:http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/3/25_Richard_Russell_-_Gold_To_Catch_Fire_%26_the_Public_Will_Notice.html
I have to ask, how many of you out there have invested in any precious metals? Can you name me 5 major gold stocks or 5 major silver stocks? Ask your friend if they can? Bet you a couple of brews that they can't do it. Unless of course, you know me. Then I guess I'd lose. Compare that to the last 2 bubbles we've had in the housing market in the US and the Naz bubble from 2000.
Here's a good story to illustrate my point. Back around the September before the tech wreck I was working in public accounting, and on this job we had a couple of interns on the job. I can literally remember one of these yahoos getting a grin on his face during the day and I asked him what was going on. He proceeds to tell me his stock Broadcom was up 5 or 10% that day, and that he's made at least 100% on it in only a couple of months...or something very similar to that. He then tells me about all the other tech stocks he would like to buy. I mean, an intern, who makes crap, is telling me what stocks to buy.
Back to the present. I have not talked to one person in the past 5 years who have talked to me about investments and mentioned anything about precious metal stocks. Hell, even when I ask people what they think the price of gold or silver is at...they look at me like I'm on drugs. If some are close, they guess around $1000 because that's the last real media attention that gold got. I'm telling you, the general public is not yet close to buying precious metals and PM stocks "en masse", and we will not hit the final blowoff stage until this happens. Will we get pullbacks and corrections in the meantime? Oh yeah, definitely. But once again, sell into strength, and buy into weakness until this bubble has played itself out. Keep you eye on the ball, and mine is looking for the 1:1 Gold/Dow ratio. Until that happens, I'm not souring on this investment trend.
Gold and silver did not end the week as I had hoped, but they are up for the week, and you can't get all that upset about that.
For all of those people who are into the nitty gritty and like details, I read this guys blog nightly. It has a bit of a conspiratorial slant to it regarding gold and silver, but if you hadn't guessed already, that's the kind of stuff I find very interesting. His name is Harvey Organ and here is the link:
http://harveyorgan.blogspot.com/
Have a great weekend and..
Until the next time...
Fiat Doubter
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