Question -- Russell, everything I read or hear is to the effect that "gold is overbought and is on the edge of a major correction." Others say that "gold is in a speculative blow-off and therefore should be avoided." Does that mean that we should stand aside or take profits?
Answer -- The great majority of these bearish "experts" have never dealt with gold nor have they lived through a precious metals bull market. Those subscribers who were with me during the late-1970s remember how gold acted when it finally turned speculative during 1978, 1979 and 1980. Huge surges, frightening correction, wild action, tremendous volatility.
Compare that action with what we see today. The fact is that gold has been climbing carefully, almost tediously, with nothing to suggest "blow-off" action. Actually, we haven't had a day in months in which gold moved up or down as much a three percent. So far, the funds have purchased very little in the way of gold. Actually, the great majority of mutual fund hold no gold at all. The idea of owning gold has not even occurred to the average US investor.
Do you know anyone, any friend, business associate, relative, who has bought a substantial amount of gold -- or for that matter, any gold at all? I get e-mails almost daily asking how and where to buy gold. I often wonder how many of my own subscribers have put as much as 5 percent of their liquid assets in gold or silver. My guess is -- very few.
Finally, I don't give a damn how much "stuff" I hear about gold being overbought, gold in weak hands, gold shorted by the Commercials, gold overvalued. When a great primary bull market gets rolling, it always provides "shock and awe" for the detractors. That's about where we are now in the gold bull market -- just far, far from the end of the road.
The truth is that almost every comment about gold that I hear is a warning to the effect that gold is in a "dangerous, speculative blow-off." What do they know! When this gold bull market finally moves into its third and final phase, you won't believe the upside action that will materialize. Remember that saying that we last heard in 1978-79 -- "There's no fever like gold fever." Somewhere ahead, maybe a year, maybe five years -- gold fever will strike big-time. And it will be a sight to behold. What we're seeing now is "nothing," nada, the early creaking of a great bull market just pushing upward off its belly.
