Richard Russell – Frightening, Historic & Unprecedented Times
April 23, 2013
On the heels of Goldman Sachs telling clients to cover their short positions in gold, today the Godfather of newsletter writers, Richard Russell, writes that we are living through some of the greatest and momentous changes in world economic history. Russell also discusses the US dollar, bonds, and the key upside breakout price objective for gold.
Richard Russell: “Today’s investors are in a most unusual position. I say that because I believe we are close to witnessing and living through some of the greatest and momentous changes in world economic history. It will be, historically, tantamount to those of us who fought and lived through World War II.
The two biggest items in America’s economy are (1) Federal Reserve notes, which we laughingly call “dollars.” These notes currently serve as the world’s reserve currency. (2) The US bond market, by far the single biggest securities system on the planet — it includes trillions of dollars worth of Treasuries, corporate and municipal bonds, and various other debt securities.
It is my opinion that within the next year or possibly two years, the dollar will lose its reserve currency status, and the US bond market will crash, taking the stock market with it. I include below a chart of the US dollar — the chart goes back to 2008. The chart depicts a series of declining tops. Declining tops describe a period of ebbing upside momentum – and ebbing upside momentum is always bearish.
The chart below tells me one thing — the world is cautiously and steadily moving away from dollars. We hear about nations agreeing to trade with each other in their own currencies (in order to avoid trading in dollars). We hear about nations moving dollars out of their reserves. I’m predicting that these bearish (for the US) trends will accelerate. These trends are forecasting the end of the US dollar as a wanted store of value.