Richard Russell - You Must Own Gold in World Drowning in Fiat
With extreme volatility across markets globally, including gold and silver, here are some key points the Godfather of newsletter writers, Richard Russell, wrote about in last couple of commentaries, “Gold -- Here we have a pattern breaking down but gold is still trading ABOVE its 200-day moving average. I think a lot of gold has been sold to cover losses and margin calls. MACD is deeply oversold, and RSI is becoming oversold. That should slow the decline in gold. The big picture that is affecting everything is massive world debt, de-leveraging, and nobody knows how or can agree on halting deflation.”

Richard Russell continues:

“Wealthy people don't sell their gold, their homes or their insurance policies. The idea is to have purchasing power even when nobody else has any purchasing power. The great fortunes are made when you're buying and there's blood on the streets.

It's easy to make money in a hard-money bull market, but hard to hold on to those profits. I look at gold and silver, not as a play for profits, but as an accumulation of hard assets, in a world that it drowning in fiat money, and a world that will probably print trillions more of irredeemable paper. The word now is patience and no faith in the world's politicians who will print ‘money’ forever in the hopes that it will float us out of the recession.

GOLD -- Is not like any other asset. Gold represents eternal wealth. I accumulate gold, but I never sell it. In a severe bear market, the only item that you can trust absolutely to survive is gold. Gold is the ultimate insurance policy, which is why I don't worry about it and am not tempted to sell it when it declines.

Who ever said that Wall Street is an easy business?

I've wondered about this all along. When the Fed flooded the markets with liquidity near the end of the 2008-09 crash, did the Fed really halt the bear market with the help of trillions of dollars that were injected into the system? At the time I argued that the bear market should be left alone, that it should be allowed to fully express itself, thereby cleansing the economy as bear markets are supposed to do.

But Fed Chairman Bernanke knew better. After all, he was the nation's supreme expert on the Great Depression, and through his studies he knew very well how to end this bear market. ‘Helicopter’ Ben Bernanke would inject billions of fiat dollars into the banking system.

If there was one thing certain, it was that Ben Bernanke would not tolerate deflation or a contraction of the money supply. After all, wasn't it Bernanke who publicly apologized on the part of the Fed for contracting the money supply during the Great Depression?

Bull and bear markets are fundamental. They tend to run to conclusion, despite what Fed Chairman want. When Bernanke moved to halt the bear market, he simply held the bear market in abeyance. But bear markets run to conclusion, and this one will be no exception.

And now I'm thinking that the bear market that was interrupted in 2009 isn't re-establishing itself as it wants to fully express itself.

I'm concentrating on the number, Dow 10,000. This is a psychological support, and a number that separates the ‘hopeful market’ from the ‘lower depths.’ If the Dow closes below 10,000, the world will know that something is dreadfully wrong, and the bear market will start feeding on itself.

In that case, I expect another feeding of QE3 in a Fed effort to halt the damage. By the way, I assume my subscribers are OUT of stocks.”

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