Richard Russell – Gold, Silver, Stocks & Collapsing Incomes
February 28, 2013
With key global markets at or near breakout levels, and continued, enormous volatility in the gold market, today the Godfather of newsletter writers, Richard Russell, covers collapsing incomes, gold, silver, stocks, the Fed and more. Here is what Russell had to say in a note to subscribers: “From an investment standpoint, there’s one major problem with this stock market. What’s the problem? The problem is simply that it’s not a good value. Great investment markets are characterized by being great values. The criterion of value is the return on the investment (the single exception to this rule is gold).”
Richard Russell continues:
“The dividend yield on both the Dow and the S&P Composite is currently below 3%. Classically, it is well to remember that when the dividend yield on these two averages is in the 5-6% range, they are great values. Because the return on the investment is now so low, investors have been forced to go to other asset classes.
This has included junk bonds, option buying and selling, preferred stocks, diamonds, collectibles, commodities, agricultural lands, art, and a variety of unusual items … My own opinion of buying or trading in such exotic products can be summed up in one sentence — “Don’t do it!” The reason I say this is because you and I are amateurs pitting our wits against professionals. In such exchanges, the professional almost always wins. It’s as simple as that.
OK Russell, then what are we to do in the face of today’s over-valued stock and bond markets? I wrote all about this in my piece that you can read on the main page of my site. The article is titled, “Rich man, poor man.” In essence this article advises that we employ one essential — patience. There is seldom a time when at least one asset class is not on the bargain table. Really, then Russell, what do you see that you consider on the bargain table now?
My answer is the precious metals, namely silver and gold are both on the bargain table. My thinking is that ten years from now we’ll be knocking our knuckles against our heads and complaining, “Back in 2013 what was I thinking? Gold was selling at 1,600 dollars an ounce and silver was selling at 30 dollars an ounce. What was I thinking? I should have — “