richard russell on gold, page-10

re: richard russell on gold for roberter "RR is a bit like everyone else, he is wrong as much as he is right. People with tunnel vision are, as in life especially concerning the market VERY DANGEROUS. You also have to be aware that his projections are aimed at passive long term investing not trading. What is the value in his articles is an understanding of the potential behaviour of Gold. It is very much a beast of long term momentum".

The above statement is so far off the mark!

You either do not read many of RR's articles or cannot decipher the message he is sending. His comments cover the broader market and not just Gold. If you think that Gold is just a beast of long term momentum you are very wrong as the majority of the market falls under this category. Thats what the market is about, momentum or trends which are part of a bigger picture.

RR has also picked many recent short term trends in the market in addition to "the big picture" so your comment that he aims at passive long term investing not trading is way off the mark. Picked this current rally in the Dow early and recommended his subscribers purchase Diamonds (DIA) which tracks the Dow Jones Index and has also suggested subscribers add to their position during this rally. Tunnel vision? I think not!

Just read an extract from this RR article dated August 21st 2002 and note his comments forecasting; following the August rally; the subsequent decline in the S & P to below the July lows and the following "major upside correction" (currently underway) which will take the market to a high next year in 2003.


S&P 500 Composite — Let’s start this Letter off with the very big picture. And here it is, the average that the pros follow, the S&P 500. I’ve charted the S&P on a monthly basis, and with it I show the long-trend 40-month moving average and the faster-moving 20-month moving average.

What we see here is the most massive top ever built in the history of the US stock market. It’s a “head-and-shoulders” top, which is a way of saying it’s a huge area of distribution. The horizontal dotted line is the “neckline” or line of support. The support comes in at around 945 for the S&P. This support was violated last month when the S&P smashed below the 945 level, dropping down to a July 24 intra-day low of 775. The July decline produced an oversold situation in the S&P. From the July 24 intra-day low, the S&P rallied to an August (so far) high of 942. That is where we are now.

My guess is that we’ll now see a period of backing-and-filling, popping and flopping, all of which will give way to a renewed decline which will take the S&P to new lows below the July lows in a final decline which could produce an historic oversold bottom. That bottom could be lower than most people are thinking about. It will be low enough to finally turn the public bearish on the market.

Question — Russell, I take it that you’re thinking that this decline is just one leg of the bear market, and it’s a down-leg that has not been completed?

Answer – That’s correct. When this down-leg finally hits bottom, which I think will occur before the end of this year, I believe we will then see a major upside correction that will take the market to a high next year in 2003. That corrective leg should serve to turn the crowd bullish, at least bullish near the highs. From the highs of next year, I expect the final or “C” down-leg to begin. This will be the “killer” leg, the most costly and most frightening leg of the bear market. I don’t expect this final leg to end before 2005 or even 2006. This final leg will end with stocks selling at great values.