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Is now a good time to own more gold?

*Dow Theory Letters, by Richard Russell, November 26, 2007

“In my opinion, there is only one broad observation that will hold up over time. And this observation is based on human nature, which, as far as I can see, never changes. The observation I’m referring to is this — stocks will rise to overvaluation, and they then will reverse and decline to the point where they are undervalued. After that, they will again rise to overvaluation. But the path they take on these two journeys will vary greatly. There will be no way to predict how or when stocks will rise to overvaluation, and there will be no way to predict how or when stocks will decline to undervaluation.

It is my opinion that stocks are now on the broad path to undervaluation. Whether this will consume six months or three years or ten years no one knows. How far the Dow will have to decline before stocks are undervalued is unknowable. All I do know is that stocks are on the downward path, and that it will be a difficult and deceptive journey.

I might say that the same concepts apply to gold and the dollar. I have no idea regarding how low the dollar might fall. I only know (suspect) that the dollar is heading down. By the same token I have no preconceived notions regarding how high gold may rise in terms of dollars and probably in terms of all fiat currencies. In my experience, I might add that both bull markets and bear markets have a habit of traveling a good deal further than most people expect.”


*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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