Richard Russell on Gold

November 18, 2003
Jim Sinclair/Richard Russell

Here’s something from Richard Russell, perhaps the finest commentator on gold and markets on the Internet today. His position on gold is clearly stated and "unhedged" I might add:

"So this is my position -- I believe gold below and even somewhat above 400 dollars an ounce is dirt cheap. In view of the amount of Fed-generated fiat paper that will have to be churned out in coming years (it will be in the multi-trillions of dollars), gold is the cheapest thing around. The US government, states, cities, corporations and individuals are currently loaded with $32 trillion in debt. On top of that, the US government has additional unfunded liabilities of around $44 trillion, all of which will have to financed.

For these reasons, it's my thesis that gold at $400 an ounce is ridiculously cheap. As a comparison, gold today is less than half the price it was at its 1980 high.

I believe three or four or five years from now we'll look back at today's price of $400 dollar gold and ask ourselves, "Where the devil were we? What were we thinking about? Gold at $400 was cheaper than dirt. Why didn't we recognize this back in the year 2003?"

As I see it, this is one of those rare times in an investor's life when he can buy an undervalued asset at a bargain price. This is a time when you can buy real money with fiat paper. At this time you can buy real money, gold, with "junk" fiat paper which is created "out of thin air" by the Federal Reserve.

Big profits have already been made by those who bought gold and gold shares two or three years ago. But that is nothing compared with what I see ahead -- as the bull market in gold moves on. We are now in the accumulation phase of the gold bull market, This is the phase where seasoned, knowledgeable investors build their positions -- even while the public and most neophyte "investors" are either ignorant of what's happening or at a time when the public actually dislikes the very product which could make them a future fortune.

But the secret to all this is the necessity to ACT. Knowledge is wonderful, but in this business, knowledge isn't worth a damn unless you have the courage to "pull the trigger" -- to ACT"

Amen to the incomparable Richard Russell. Spot on and in COT's face too!

Years ago, I financed Sutton Resources by trading the gold market and plowing millions in profits back into the company. I am now doing the same thing for TNX - leveraging my leverage so to speak.

Success is my destiny and, with me, yours as well. There will be  bumps in the road ahead but the ride will be both memorable and lucrative for anyone willing to stay the course - I guarantee it.
 
Tuesday, November 18, 2003, 12:15:00 PM EST
Dollar Decline One Way Ticket For Gold
     Author: Jim Sinclair/Bloomberg

This type of news is a one way ticket for gold over $400 because all the Kings horses and all the King’s men can’t put the Humpty Dumpty US dollar together again - the triple deficits guarantee that.
 
Dollar Tumbles as International Investors Buy Fewer U.S. Assets

Nov. 18 (Bloomberg) -- The dollar had its biggest decline against the euro in about a month in New York trading after a government report showed net foreign purchases of U.S. securities in September fell to the lowest in five years.

more....

 
Tuesday, November 18, 2003, 12:00:00 PM EST
Important Message to the Gold Community
     Author: Jim Sinclair

Andy’s Army has met its match. In the gold market, COT from a financial standpoint is a peanut vender compared to the currency crowd.
 
COT is an Odd Lot in market terms compared to the currency crowd which turns one trillion real (not derivatives) US dollars each day in the cash currency markets.

On the metals side, COT can’t fool with this bunch who today is having them for lunch. The combination of the rebirth of inflation and the death of the US dollar has brought the currency crowd into the ultimate currency - gold.

If you failed to switch or leg forward your December 400 gold Calls do not give them away for pennies. I am going into the maturity long December 400 gold Calls because gold has a great chance of being over $400 this week. I will not give the Comex option geeks the pleasure of taking me out. I intend to take them out.

This is a war and the opposition, “Andy’s Army,” has just been flanked by superior financial forces - the currency crowd. Andy's normal bearish Monday morning gold elitist ranting is now a sign of weakness and that has set  up his COT clients to be overrun.

The strategy for those with no margin problems is to stand pat and do nothing whatsoever. Those in the Community that were sweating margin last night are the walking wounded.

To these people, I suggest standing pat for now but lightening up your margin position to manageable levels as the gold market moves smartly higher to and through $400 this week.

You margin-addicted guys/gals are the vulnerable ones that COT tries to stampede. Therefore, the battle strategy is to be stampede-proof by lightening up margin obligations to manageable levels. Selling into strength never hurts a situation or the Community. It is in fact good for it.

Chasing prices lower is an act of breaking ranks and running away from the fight. So you margin people must always sell into strength. Use margin to initiate the position if you must, but never ever pyramid up in gold unless you want to be living in a cardboard box, divorced and despised. This time the gold shares are leading the way higher and that is, IMO, a sound and strong sign.

Watch the currency crowd buy gold off US hours which are the primary hours in which COT tries on Comex Access to bluff the wrong crowd. This time, when the offers of lots of 100s appear, I believe they will be taken up and COT itself will be taken to the cleaners.

Those of you that have been doing naughty things on Comex Access have actually done naughty things on the Comex in the State of New York too.

A special email address will be set up for the USD$50,000 in gold coin reward for evidence and testimony leading to the arrest of perps who have attempted to manage the price of gold for the benefit of commercial interests to the detriment of the public.

http://www.jsmineset.com/home.asp