A Russell excerpt from Jesse's site:
And this from Richard Russell
"Now I want to reveal my latest thoughts, which have finally come together. The US has a national debt of $13 trillion (that's trillion, not billion). There's no way in God's name that the US can ever pay off that debt. Actually, if the US does nothing the interest on the debt will eat up the nation. Worse, aside from the national debt the US has over $50 trillion in unfunded liabilities.
To put it frankly, the US is facing a debt future that can not be solved by cutting back on expenses and raising taxes. Even if the US taxed away all the income and profits of individuals and all corporate profits, the government would still not be able pay off its debts.
In my opinion, the US MUST default on its debt. There are two ways to default. One is simply to renege on the debt. I don't think the US would ever do that. If the US did that, nobody would ever deal with the US again. The other way to default on the debt is to inflate it away. I'm absolutely convinced that this is the path that the US will take. If the US inflates enough, then over time (many years) the devalued dollar will tend of reduce the power of the debts…
Lastly, what about gold? Gold formed a head-and-shoulders pattern. The pattern broke down, and August gold sank to 1156. But there gold held. It was if a net closed under gold. The plunge scared many of the late gold-buyers out of the market. Since its July 27 low, gold has been quietly creeping higher.
My guess is that gold has bottomed. Too many investors and too many central banks are potential buyers of gold. And they are 'bottom-fishing."
As far as I'm concerned, the "word" is out. The US will default on its monster debts. The US will default via systematic inflation. This will gradually "kill" the dollar. The protection against declining purchasing power of the dollar (brought on by Fed inflation) is gold.
As this is recognized by the masses, gold will move higher. Ultimately, this will develop into the speculative third phase of the gold bull market. The Russell opinion -- this is the time for gold accumulation and patience, a lot of patience.
Question -- Russell, I see a few of the smartest hedge fund managers (Soros, John Paulsen) have been buying heavily into gold mining shares. So, gold bullion or gold mining shares, which should we buy?
Answer -- The fund managers don't want a "safe-haven" position in gold -- they want potential profits. I believe the fund managers who are stocking up on gold mining shares are thinking that a speculative third phase in gold lies somewhere ahead. They're thinking that if gold explodes on the upside, the gold mining shares will go nuts. The shares will go crazy because they have the leverage. It will not cost them any more to mine gold even if the price of gold advances (yes, but union labor may cost more, and there will be the problem of higher taxes.
So I'll admit it -- if gold goes nuts on the upside, fortunes will be made by those holding gold shares. But I still prefer the actual product -- bullion gold. It's a cleaner play, no worries about a mine running out of reserves, no worries about union wage-boosts, no worries about political back-lash or confiscation, just fewer worries. And I avoid worries whenever I can.
To wind it up, I don't care for the stock market's action, but I do like gold's action. Gold and cash, that's where I want to be. And I'd be happy if my subscribers would copy my position." |
