Did someone mention gold? Richard Russell Dow Theory Letters April 10, 2003
Extracted from the 9 April 2003 issue of Richard Russell's Dow Theory Remarks
Gold --Next, I'm asked how gold could rise if this nation goes into a deflationary downward spiral?
If deflation takes over (and of course, that's debatable), then with all the debt in this nation, I believe we'd see mass bankruptcies on the part of both corporations and individuals. In that case, I think there could be chaos and grave doubts about the viability of the dollar and certainly about the dollar as the world's reserve currency. Furthermore, if America deflates, the whole world will deflate since America is the market everyone sells to -- and the market everyone depends on.
If people start worrying about the dollar, where do they turn? The euro is new and untested, the yen is just another fiat currency -- where do you turn for safety? Did someone mention gold? And that's my answer to the question of what could happen to gold in a deflation.
One other thought -- if the dollar begins to collapse, other nations will want to lower the international value of their own currencies so they can compete in the export markets. Thus we could have a deadly war of competitive devaluations.
Competitive devaluations would benefit gold, since it would take an increasing amount of any given currency to buy an ounce of gold. In the end, gold is the immutable, tangible standard which every paper currency dances around.
More on Gold -- I'll repeat it -- I think gold has bottomed. A lot of this business has to do with art and instinct. OK -- I'll apply my art and instinct. The "signal" I've been looking for that will tell us that gold has bottomed is HUI, the "gold-bugs" unhedged average. I believe a close by HUI at 125 or better will be the signal that the bottom for gold has been completed.
If you haven't bought any gold, I believe this is a good time to move. To make it simple, buy half your allotted investment in krugerrands and the rest in Newmont Mining, Goldcorp, Glamis and Royal Gold.
Market Data 
Markets 
AI
