Sep 19, 2008

Richard Russell: Hold your gold coins!

Extracted from the Sep 16, 2008 edition of Richard Russell's Remarks:

"The great tragedy unfolds phase by phase. This is the way I see it.
The first phase was the giant edifice of inflated home prices topping out and rolling over. The second phase was the collapse of the great Wall Street houses, the third phase was the stock market sinking day after day.
The path of the stock market directly affects public sentiment. And I'm very much afraid that the next phase is going to be a pull back in spending, particularly discretionary spending, by the US public. Jobs will be difficult to find, the word will spread, if you've lost your job, you're not going to find another one at the same level of pay (if you find one at all). This will have an impact on retail sales, and US imports (which will have international implications for the exports of foreign companies, remember, the US is buyer to the world).
In this atmosphere, the big money, as I see it, will be made by wealthy speculators who will buy up foreclosed housings at bargain prices, often below the cost of replacement. Everything now depends on people being able to finance what they own, and this takes income and cash.
The two rarest items around will be just that -- cash and income. The great danger as I look ahead is that the bearish trends will feed on themselves.
Frightened people dump their stocks for cash, the result is a sinking stock market. A sinking stock market further frightens people and pushes them to sell ("get me out at any cost"). When I tell people that the correct posture now should be cash and gold coins, they look at me as though I was crazy. That reaction makes me worry.

One advantage of gold coins is that you're not tempted to trade them (it's too difficult). As my buddy, old-timer Sir Harry Schultz puts it, "The last man standing is he who owns gold." Hold your gold coins."

...to read R. Russell's snippet on 321Gold, please click HERE

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