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Does Bolivia’s nationalization of raw materials suggest a more aggressive stance in bullion?

*Dow Theory Letters, Richard Russell, May 2, 2006

“News: Bolivia is set to nationalize its foreign-run gas fields. A few weeks ago I warned about this worldwide move to nationalize foreign sources of raw materials. Who’s next, Venezuela in oil, Peru, Ecuador, Nigeria, Iran, or even the Saudis? And why not, these nations ask — “the raw materials belong to us, we’re being cheated by foreigners who are making huge profits off our life blood.” The move towards nationalization could endanger many oil and mining shares over time.

My advice now is to put new money into the actual metals.”

“I’ve often noted that in order to make real money in this business, you’ve got to take a major position in something, a stock sector, stocks in general, and individual stock like Starbucks or Google, oil, bank stocks — some area. And this is very hard to do today because the stock market, from a valuation standpoint, is unattractive.

I loaded up on stocks in 1957 and again in 1974. I did it more conservatively in 1982. In 2001 and right up to currently I did it with gold. To be honest, the only area where I felt safe in “loading up” was, and still is — gold.

Did I miss the market move, did I mess up by not buying the market? In this business everything’s a choice — a choice to be in or out of the market, a choice to diversify, a choice to be heavily in one sector or one stock. I chose gold, and I’m not sorry.

The chart below is simply a chart of gold divided by the Dow. Except for a brief period during 1983, gold has either kept up with the Dow or outperformed the Dow. As you can see on the chart, the ratio of the two is currently at a high in favor or gold. I continue to believe that the fundamentals are working in favor of gold. I’ll stay with the yellow metal.”

*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.

Monex Bullion Investor