Richard Russell On Gold
publisher of the Dow Theory Letters since 1958
April 23, 2010 --Confession -- I've spent roughly 64 years studying the stock market on a daily, weekly and monthly basis. I'd say that 80 percent of that time I was perplexed or unsure of my stand. I know in the advisory business you are always expected to know exactly what's going on and where to place your money. In my experience, the more cock-sure the advisor, the bigger the quack.

One problem is that the stock market isn't always talking, and when it isn't, many advisors create scenarios so they can carry on the illusion for their readers that they, at all times, understand what is happening.

How about what's happening now? Here's what I think or suspect. I think we're in a long-term bear market and currently operating in a rally in the bear market, a rally that most people take as a new bull market.

I firmly believe we're witnessing a great primary bull market in gold. This bull market is opposing a long-term bear market in fiat or non-intrinsic currencies. Since there is no discipline putting a limit on fiat-currency production, I believe in our lifetimes we will see the end of fiat currencies as acceptable substitutes for real money. When that happens, there will be no ceiling for gold. In their guts and in their hearts, every seasoned investor knows this, which is why the bull market in gold will continue.

How high will gold go? Wrong question,how low will fiat currencies go? The answer, as Bob Dylan might say, is "blowin' in the wind."

I think gold is now under heavy accumulation. I note that gold is often knocked down in the thin after market. I'm beginning to think that this is done on purpose. Large interests who want to accumulate gold have a reason to want to knock gold down, and thereby be able to accumulate it at "reasonable" prices. The last thing they want is for gold to run away on the upside before they have accumulated as much as they are able.  I think this is particularly true of China and Russia and other Asian nations.