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RUSSELL: THIS IS ONE OF THE LARGEST TOPS IN STOCK MARKET HISTORY

Richard Russell has grown very vocally bearish in recent months. Earlier this year, Russell warned that the stock market was once again becoming grossly overvalued despite its relentless new highs.  He has maintained that the bear market never ended and that the world is far too indebted to exit the bear market.  He also believes the bear will not end until all fiat currencies have failed.  Although I disagree with him on many aspects of the micro I agree with his larger macro outlook.  This bear market is not over.  The secular bear market lives on.  Mr. Russell thinks we might be on the verge of a terrible collapse:
“We’re now in the process of building one of the largest tops in stock market history. The result, I think, will be the most disastrous bear market since the ‘30s, and maybe worse.
Question: “What could possibly be behind such a bear market?” you ask. “The stock market is stirring up optimism on a weekly, if not daily basis, by not falling apart.”
Answer: This is the “rest” or “dead zone” I was talking about. Bear markets don’t conclude in a day, a week or a month. Months will go by, often adding to the bulls’ optimism.
I think the key element behind this great bear market will be the complete destruction of all fiat currencies. This has been a long time coming. Fiat currencies are “wealth” created by man. They are created without sacrifice, without labor, without risk, and without sweat. Basically they are an immoral device, created by secretive bankers.
If you watch the figures carefully, you’ll note the subtle deterioration. For instance, the advance-decline ratio, although up slightly for the week, had a relatively weak performance with the Dow up several hundred points over the course of the week. And we broke the trendline in May (see the chart below showing the cumulative advance-decline line for NYSE Common Stock only, which is what we publish in our figures (courtesy of DecisionPoint — www.decisionpoint.com). The vertical lines are Jan 2008, Jan 2009 and Jan 2010 as you move to the right on the chart.
russ1 RUSSELL: THIS IS ONE OF THE LARGEST TOPS IN STOCK MARKET HISTORY
My old friend, Bob Prechter, is talking about Dow 400. I used to think this was an absurd joke. I no longer think it’s a joke. The ultimate result will be a primary bear market shocking in duration and extent.
Gold: As for gold, its stellar performance goes on. This in the face of ominous warnings of various worried experts. On Friday, August gold rose to a new record high. The next step will be into the 1300s — point&figure upside objective is now 1310.
russ2 RUSSELL: THIS IS ONE OF THE LARGEST TOPS IN STOCK MARKET HISTORY
Gold shares are lagging bullion in this last move, not yet showing the break-out seen in the yellow metal.
russ3 RUSSELL: THIS IS ONE OF THE LARGEST TOPS IN STOCK MARKET HISTORY
The world (minus the US) is loading up with the yellow metal with banks running out of vault space. The great 10-year primary bull market is moving into its 11th year. The bull market in gold attests to the systematic decline in the value of the dollar compared with real money – gold.
One of the greatest modern traders, John Paulson, who made billions on the housing collapse, has, I understand, all his personal money in gold-related items. Many of my subscribers have now built gold profits beyond anything they have ever achieved before. I know at this point one could get itchy fingers thinking of the profits achievable by switching gold for fiat currency. I warn subscribers, stay on the yellow brick road. The big profits, the astounding profits, will accrue when gold finally bursts loose of its prejudices and freely expresses itself.
My advice now is to put as much of your money as you’re comfortable with in bullion coins. Remember the simple phrase that’s been around through years of history – “There’s no fever like gold fever.” Fiat money is doomed. Act on it.”

IS GOLD IN A BUBBLE?

24 JUNE 2010
Jeff Clark, Senior Editor, Casey’s Gold & Resource Report
While a few mainstream outlets are coming around to at least acknowledging gold’s stellar run, most remain skeptical or outright bearish. And the blasphemy they purport is that gold is in a bubble.
Let’s settle it, right now, and shut these naysayers up.
2010GoldPriceWhatBubble%282%29 IS GOLD IN A BUBBLE?
Gold returned 10 (and as much as 14) times your money in the 1970s bull market, and the Nasdaq advanced over 1,900% during its run. Our current gold price is up about 400% (when measured on a daily basis, not monthly as in the chart).
In fact, the Nasdaq gained 182% in the final year of its peak, and gold surged 80% in four weeks during the blow-off top of January 1980. None of this is happening to our current gold price.
Note to doubters: we’ve got a long way to go before we start legitimately using the “bubble” word.
Besides, the fact that these skeptics aren’t buying – and don’t even own any gold in the first place – is further proof we’re not in a bubble. Ever notice none of them claim to own it?
And they definitely need to catch up on world affairs. The World Gold Council (WGC) reported that Russia, Venezuela, the Philippines, and Kazakhstan all bought gold in the first quarter. Central bank sales, meanwhile, remain depressed.
Russian President Medvedev won’t quit his quest to move international reserve assets away from the dollar. And his country’s central bank is backing up his words; it increased its gold reserves by $1.8 billion and decreased its currency reserves by $6.6 billion so far this year.
China, the world’s largest gold producer, already buys all the gold produced within its country. But the WGC recently forecasted that overall gold consumption in China could double in the coming decade, a demand that production certainly won’t be able to match.
The Iran/Israel showdown appears closer almost every week. As further evidence that each side is preparing for conflict, Saudi Arabia recently agreed to permit Israel to use a narrow corridor of its airspace to shorten the distance for a bombing run on Iran – all done with the agreement of the U.S government. Simultaneously, the UN Security Council imposed a new round of sanctions on Tehran. Nobody appears to be backing down.
And the current run in gold is with no inflation. Core CPI has fallen to the lowest level since the mid-1960s – but what happens when inflation does set in? And what if it’s as bad or worse as the 14% rate we got in the ‘70s? Sure, deflation is the immediate concern, but with a U.S. federal debt of $13 trillion, unfunded future liabilities exceeding $50 trillion, and a current budget deficit of over 10% of GDP, a massive debasement of the dollar is virtually ensured, triggering an onslaught of inflation. It’s coming.
With all these concerns, these guys don’t want to own gold?
Bubble, schmubble. Stocks are vulnerable, bonds are toast, currencies are fiat. Other than cash, where are you going to put money right now?
Gold could correct, of course, and I frankly hope it does. I’m not counting on it, though. The price is just as likely to head the other direction. But if it does temporarily fall, while the bubble-heads are smirking, I’ll be buying.
Someday I think we’ll be reversing roles.