Why are market analysts in favor of gold and silver bullion?
*Dow Theory Letters, by Richard Russell, March 3, 2008
“The ugliest and most bearish scenario (and this is a distinct possibility) is that we are now in the early phase of a full-blown secular bear market of the 1962 to 1980 variety. If so, we will probably be dealing with two or more smaller cyclical bull and bear market coming within the overall structure of a 15 to 20 year bear market. I will write more about this depressing possibility on a site tomorrow or later in the week.
In the meantime, I repeat that the place to be now is in gold and cash (T-bills). And I’ll add silver to this short list. Gold is reacting to the weak dollar and the inflation in tangibles including commodities. Unfortunately, we’re moving into a condition which, for want of a batter name, we call ‘stagflation.’ This is a description of a time of poor business which is occurring in the face of rising prices. This combination is the worst for the typical American since it means that wages are stagnant and unemployment is rising — this while purchasing power is under pressure and the cost of living is rising.
Last year I wrote that with the dollar in a long-term declining trend and with the US running outlandish budget, trade and current account deficits, I could make one almost certain prediction — my prediction was that the standard of living for the average American would be heading down.
But beyond everything else that I have written, it will be crucial to monitor and analyze the action of the markets. No matter what I think, no matter what the best minds in the nation think, no matter what course of action the government or the Fed take, it’s the action of the market that I trust above all else.
We’ve gone through an obvious major topping pattern in the stock market. We’ve had a series (so far) of five 90 % panic-type down-days. We’re dealing with what appears to be a primary bear market. We’re watching to see whether the January 17-22 lows hold or are violated. My subscribers and I are in a very defensive position holding — gold and cash.”
*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.