In his Daily Remarks for June 1, 2011, Richard Russell, posted his thoughts on gold and fiat currencies..
Russell's Remarks come with a subscription to his Dow Theory Letters, $300 a year.
Russell deals primarily with the stock market, but he became a gold bull in 2000, which, of course, was excellent timing. He was also a gold bull in 1970s, which illustrates Russell's insight into the precious metals markets. For more about Russell's Dow Theory Letters, visit www.dowtheoryletters.com
June 1, 2011 -- Dennis Gartman of the famed Gartman Letter writes: "We cannot imagine how this shall play to the people of Germany, who have openly declared their opposition to further such financial arrangements to aid the Greeks. They know all too well that when the Greek government is thus bailed out, the Portuguese and the Spanish and the Italians and the Irish shall be right behind them asking for their fair share, odious though that may seem. However, if Greece is bailed out, what Portuguese or Spanish or Italian or Irish lawmaker would be willing to stand up and say that he'll not demand the same for his countrymen? Of course they will demand that their nation be given the same... or better....considerations."
Russell Comment: Thanks Dennis, I think you're right.
Yes, it's a mad, mad, world of fiat currencies. The problem is that there's no clear definition of any fiat currency. The yen is worth so many pounds sterling. The Swiss franc is worth so many US dollars. The drachma is worth so many renminbi. It's crazy, there's no base from which to gauge any fiat currency.
Today it looks as though Greece, Europe's economic invalid, will get a bail out from probably Germany and possibly France. Thus Greece will be able to remain in the EU zone -- at least for a while longer.
With the euro rallying on the "encouraging" news out of Greece, the euro's competitor, the dollar, has sagged. With the dollar lower, upward pressure is put on gold and silver.
Billionaire speculators disagree on gold. Soros says "gold is in a bubble," and he has sold most of his gold holdings. Billionaire, John Paulson, has kept his huge position in gold.
Portfolio managers are cautiously advising "Entrance positions of "5% to 10% in gold," this after gold has risen for ten consecutive years.
The Russell opinion: Gold is not like an investment in Microsoft or Google. Gold doesn't grow like Procter and Gamble. Gold doesn't pay a dividend like Abbott Labs. Gold is a creature of savings. Gold is pure wealth. Buying and holding gold is like buying a gem-diamond or a Picasso. Gold is a form of eternal savings. On that basis, regardless of where the dollar-price of gold goes or where the yen price of gold goes, there's no need to ever sell your gold.
Over the decades and the centuries, the safest place to keep your wealth has been in gold. Even Picassos can go out of style. Colored diamonds are currently taking precedence over white diamonds. But gold is built into the DNA of man. In coin form, in brick form, in necklace form, in the form of Rolex watches, gold has always been a magnet for men (well, all except for Warren Buffett).
During hyper-inflation or deadening deflation, when "all is lost," gold holds it attraction for humans. Gold, in a matter of speaking is "the last man standing."
Month by month, year by year, to the frustration of the Fed, gold is creeping back into the system. Now we hear that the state of Utah has instituted a new law stating (as per the US Constitution) that gold and silver are legal tender for the settlement of all debts. Furthermore, gold will be valued as per its weight rather than its absurd legal tender price on the face of US coins. Utah will probably start issuing gold and silver coins or bars in various denominations so they can be used in trade in Utah. Other states are expected to follow Utah's example. If so, people may start to demand payment for their work in silver and gold rather than in irredeemable Federal Reserve notes.
If you have a check to cash, would you rather the bank pay you in paper or in mini-bars of gold? It's only a matter of time. What will bring about the change? Two items -- (1) monetary education of the public, and (2) a rising price for gold and silver!
Over recent months gold has fluctuated opposite to the US dollar. A declining dollar acts to boost the dollar price of gold. But this may be changing. Gold is now rising against all fiat money. An increasingly sophisticated world is growing ever-more suspicious of fiat money, and the trend is toward buying gold
June 1, 2011 -- Dennis Gartman of the famed Gartman Letter writes: "We cannot imagine how this shall play to the people of Germany, who have openly declared their opposition to further such financial arrangements to aid the Greeks. They know all too well that when the Greek government is thus bailed out, the Portuguese and the Spanish and the Italians and the Irish shall be right behind them asking for their fair share, odious though that may seem. However, if Greece is bailed out, what Portuguese or Spanish or Italian or Irish lawmaker would be willing to stand up and say that he'll not demand the same for his countrymen? Of course they will demand that their nation be given the same... or better....considerations."
Russell Comment: Thanks Dennis, I think you're right.
Yes, it's a mad, mad, world of fiat currencies. The problem is that there's no clear definition of any fiat currency. The yen is worth so many pounds sterling. The Swiss franc is worth so many US dollars. The drachma is worth so many renminbi. It's crazy, there's no base from which to gauge any fiat currency.
Today it looks as though Greece, Europe's economic invalid, will get a bail out from probably Germany and possibly France. Thus Greece will be able to remain in the EU zone -- at least for a while longer.
With the euro rallying on the "encouraging" news out of Greece, the euro's competitor, the dollar, has sagged. With the dollar lower, upward pressure is put on gold and silver.
Billionaire speculators disagree on gold. Soros says "gold is in a bubble," and he has sold most of his gold holdings. Billionaire, John Paulson, has kept his huge position in gold.
Portfolio managers are cautiously advising "Entrance positions of "5% to 10% in gold," this after gold has risen for ten consecutive years.
The Russell opinion: Gold is not like an investment in Microsoft or Google. Gold doesn't grow like Procter and Gamble. Gold doesn't pay a dividend like Abbott Labs. Gold is a creature of savings. Gold is pure wealth. Buying and holding gold is like buying a gem-diamond or a Picasso. Gold is a form of eternal savings. On that basis, regardless of where the dollar-price of gold goes or where the yen price of gold goes, there's no need to ever sell your gold.
Over the decades and the centuries, the safest place to keep your wealth has been in gold. Even Picassos can go out of style. Colored diamonds are currently taking precedence over white diamonds. But gold is built into the DNA of man. In coin form, in brick form, in necklace form, in the form of Rolex watches, gold has always been a magnet for men (well, all except for Warren Buffett).
During hyper-inflation or deadening deflation, when "all is lost," gold holds it attraction for humans. Gold, in a matter of speaking is "the last man standing."
Month by month, year by year, to the frustration of the Fed, gold is creeping back into the system. Now we hear that the state of Utah has instituted a new law stating (as per the US Constitution) that gold and silver are legal tender for the settlement of all debts. Furthermore, gold will be valued as per its weight rather than its absurd legal tender price on the face of US coins. Utah will probably start issuing gold and silver coins or bars in various denominations so they can be used in trade in Utah. Other states are expected to follow Utah's example. If so, people may start to demand payment for their work in silver and gold rather than in irredeemable Federal Reserve notes.
If you have a check to cash, would you rather the bank pay you in paper or in mini-bars of gold? It's only a matter of time. What will bring about the change? Two items -- (1) monetary education of the public, and (2) a rising price for gold and silver!
Over recent months gold has fluctuated opposite to the US dollar. A declining dollar acts to boost the dollar price of gold. But this may be changing. Gold is now rising against all fiat money. An increasingly sophisticated world is growing ever-more suspicious of fiat money, and the trend is toward buying gold
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