*** Richard Russell on gold ***
From Monday night......
Richard Russell last evening:
"For years I've told my subscribers that the "royal road to riches" is via compounding. You bought securities that threw off interest or dividends and you reinvested the interest and dividends and by doing so your assets compounded and grew geometrically.
But with the Fed's attack on savings, with the dollar facing certain attrition, we have to change our tactics if we want to survive financially. Today, as I see it, the question isn't whether we move into gold and gold shares. The question is -- "What percentage of our assets should be in gold and gold shares?"
I don't have the perfect answer to that question. I can only tell you what I've done. I've moved an increasing percentage of my own assets into gold and gold shares and I've included some silver shares. I've done this week after week.
The opportunity cost of buying gold, which pays no interest, or gold stocks, most of which pay no dividends, is rather small today. Put the money in T-bills and you receive almost nothing. Well, then, darn it, why not buy gold or gold shares instead of T-bills? Or, on the other hand, you can always buy common stocks which sell at over 30 times earnings and pay little or nothing in the way of dividends.
So the fact is that today the opportunity cost of buying gold or gold shares has seldom been lower. At the same time the argument for buying the precious metals has seldom been stronger.
Of course, there's another plus in the precious metals or real money picture. The other plus is that the general public isn't aware of the gold bull market. The gold bull market is still in its early stages -- it's in the first or accumulation phase. Gold is still "cheap" and silver, if anything, is even "cheaper."
All the gold ever produced in the history of the world has a value of about $1.4 trillion. The Fed creates that much liquidity in a matter of 18 months -- or less if it wants. The value of all the gold mines in the world is around $150 billion. That's less than the market capitalization of most of the individual stocks in the Dow.
Bull markets end in high speculation and public frenzy. We saw that most recently during the year 2000 on the NYSE. I want to remind subscribers of the phrase that was prevalent during the late 1970's right into 1980. It runs, "There's no fever like gold fever."
Remember that phrase. You'll be hearing it again before this gold bull market is over. And by the way, I foresee this gold bull market ultimately dwarfing the gold bull market of the '70s."
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