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*Dow Theory Letters, by Richard Russell, March 17, 2010

”The great bull market in gold has been in force for almost a decade.  I’ve shown where gold, since 2000, has closed higher for nine consecutive years.  During that time gold has advanced from prices in the 200s to its current price of approximately 1124.

Now suppose the stock market had done the same thing.  Can you imagine the frenzy that would be greeting stocks today? Yet, incredibly, the fantastic bull market in gold has elicited little or no excitement from the US public.  Go to your favorite local store, buy a few items and try to pay for those items with an American gold eagle coin.  The clerk will stare at the coin and likely say, ‘Sorry I can’t accept that for payment, we only accept dollars.  By the way, what is that pretty coin?’

It’s truly remarkable.  Within the space of three or four generations Americans no longer even recognize Constitutional money!  I’ve said before that gold is imbedded in the DNA of mankind.  We’re closing in on the time when, like a light bulb turning on, Americans will finally realize that they’ve been hoodwinked by one of the greatest swindles in the history of civilized man.  They’ve been working and saving printed paper with the firm conviction that the paper they worked so hard for was money.  Wait, why is that printed paper worth anything at all?  It’s worth something simply because the government has pronounced by fiat that dollars are ‘legal tender for all debts, public and private.’  So the ‘dollars’ that we work our whole lives for, is backed by nothing but the ‘full faith and credit of the United States.’  And how good is that credit?  Two credit agencies are now threatening to lower the rating of US bonds.  If that happens, it will be a monumental shocker.  And yes, all sovereign money is now being judged and classified as to its worth.  Did anyone ever gauge or debate the value of gold?  As I see it, we’re watching the very beginning of the end of fiat money.

As we approach the era of suspicion about fiat money, knowledgeable investors will increasingly seek the safety of real, intrinsic Constitutional money — gold.

And the great irony is that highly-placed but ignorant ‘experts’ continue to denounce gold as a ‘useless relic.’  In the face of this pathetic propaganda, the price of gold continues to rise in terms of fiat money.  Actually, the price of gold doesn’t change.  It simply takes more dollars, more reals, more rubles, more bahts to buy one ounce of gold.  What this really means is that fiat money in all its varieties is being devalued in terms of real, intrinsic money — gold.

I’ve said all along that the primary trend of the market cannot be halted or reversed.  However, the Fed, Ben Bernanke and the Administration believe that with enough quantitative easing and enough stimuli the bear market can be halted and even reversed.  Ah, but there’s the matter of ‘unintended consequences.’  What are those unintended consequences?  In their frantic efforts to avoid a painful and politically-unacceptable depression, the Fed and the Treasury and the administration have placed the very credit of the United States in jeopardy.  They have loaded the US with the greatest mountain of debt the world has ever seen.  Ultimately, this will lead to a different monetary system.  And ultimately, the US public will be enlightened about the fraud of fiat money.  And lastly, it will lead to a frenzy to own gold.  Those of my subscribers who were with me during the 1970s probably remember this phase, ‘There’s no fever like gold fever.’  Before this bull market in gold is over, I believe you’ll be hearing that phrase again.”


*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.

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