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Does a large allocation of investment assets in bullion make sense?

*Dow Theory Letters, by Richard Russell, March 4, 2010

”Days go by, weeks go by and the Dow is still trading below the critical level (50% principle); 10725. I call the area below Dow 10725 the ‘bear zone.’  Meanwhile, the business news seems to be getting better (if we can believe the government and the Fed handouts), but I don’t believe the handouts and propaganda, I follow the money, which is another way of saying that I follow the markets, not the biased nonsense that the government announces.

Ever since the early 1980’s you could buy ‘good stocks and hold ’em forever,’ Buffett style). You can’t do that anymore because the further out you look, the cloudier the picture seems to become. Or as our Fed and administration must say to themselves, ‘It’s too much for us to fix.  Let our kids and grandkids figure it out.  We had the punch bowl and the good times, let the kids make the sacrifices. We’re just too old to hold up under hard times and balanced budgets.’ ”

”OK, OK, let’s get serious.  The big play that I see coming up is in gold. As suspicion increases regarding the dollar, the Treasury may have to raise the price of its huge hoard of gold to market. The figure I hear is that to fully back our phony Federal Reserve notes with something tangible, gold would have to be priced at around $7000 and ounce or maybe a bit over $6000. Could that ever happen? In an emergency, anything can happen. Just look at what happened to our federal debt over the last year. The truth, one of these days I expect to see gold bricks and gold coins on the cover of both Time magazine and Newsweek. Of course, that will probably mark the top of the great gold bull market.”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.