Richard Russell: Downturn will be harder, longer than expected

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rci2145's picture
rci2145
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Richard Russell: Downturn will be harder, longer than expected

Legend Richard Russell says that the economic downturn will be more severe and last longer than expected.  He says there is a treasury bubble and reccomends cash but then goes on to say that gold is the best form of cash.

 http://finance.yahoo.com/tech-ticker/article/227294/Richard-Russell-Bear-Market-Will-Last-Longer-Go-Deeper-Than-People-Expect?tickers=^DJI,^DJT,GDX,GLD,TBT,TLT?sec=topStories&pos=9&asset=TBD&ccode=TBD

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cmartenson
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Re: Richard Russell: Downturn will be harder, longer than ...

I am watching gold in the paper US markets (practically no physical gold trades in the US markets - most is paper and derivatives) get sold and sold hard once again.

The pattern is pretty clear to me, someone is interested in achieving a lower gold price by the use of paper.

The way in which stop-clearing volume runs will come in to the downside is an old trick to try and drive price down and it's very effective.  Couple this to the fact that SWI, UK, USA, and Japan are all now engaging in trillions upon trillions of dollars of "quantitative easing" (printing) along with the general financial crisis and you've not had a more gold favorable environment in decades.

Yet, almost without fail, day after day, gold is sold in the NY paper sessions, or at least capped in price.

The simplest explanation for this is that there is one or more interested parties that desire to see the price of gold lowered or capped.  It is no longer possible for me to explain several market 'behaviors' by logic and reason unless I broaden my view to include "achieve a specific policy aim".

That is, there are market participants who are "non-economic" in their behaviors meaning price is only relevant as a signaling mechanism.

The reason this bothers me is because it leads to false price signals which ultimately steer people, and even nations, into poor and sometimes irreversible decisions.

But, eventually, false price signals have a way of being undone and here's where I agree with Richard Russell. This downturn is a long way from being resolved and one does not want to hold much paper currency because of the tendency of governments to overdo it on the printing front.

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Ken C
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Re: Richard Russell: Downturn will be harder, longer than ...

it would seem to me that a big player with deep pockets (like China) could not only make a lot of money but also break this cycle of paper gold selling by simply start taking delivery on futures gold postions. Make the short sellers actually deliver physical gold. Am I wrong about this?

 

Ken

 

rci2145's picture
rci2145
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Re: Richard Russell: Downturn will be harder, longer than ...

According to Jim Rogers who knows more about commodities than anyone, there is no manipulation in the gold markets.  China does not want to convert their dollars into gold to raise the price becasue that would kill the value of their treasury investments.  China is slowly taking those investments and moving them into soft commodities but it would not be surprising if they start buying gold.  They have to do everything slowly though as to not create a panic out of the dollar.

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investorzzo
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Re: Richard Russell: Downturn will be harder, longer than ...

Chris, I have heard that unless everyone calls in the gold they own, paper for physical gold, the game will play on in manipulation of paper derivatives. Just think if everyone demanded gold in physical form. The price would be over 2,000 in no time. But of course the dark pools of money from the market makers would never allow that to happen. It would take countries like China to shake that up!

Like I have learned from experience. You have a better chance of making money in Vegas over  Wall Street. The manipulation makes Enron look like a boyscott.....    Jon

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cmartenson
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Re: Richard Russell: Downturn will be harder, longer than ...

Errrr...uh...let's accept your opening propositions that Jim Rogers knows more than anyone about commodities AND that he avers there's no manipulation today (which I would respectfully request a link as I've not yet read this and I follow him reasonably closely).

We still need to amend your statement/claim for the purposes of clarity.

In 1969 the London Gold Pool operated as an official and now well characterized period of gold manipulation by several governments.

In the mid-1990s, under Clinton/Rubin, gold was officially manipulated to achieve specific interest rate and dollar value targets.

So the amendment to your claims would have to be,  for the sake of clarity, "Jim Rogers believes that TODAY there is no government manipulation in the gold markets despite past known and well-chronicled events where this has occurred."

In other words, if your characterization of Jim Rogers is correct, he would make a lousy police officer because he would presumably arrive at a call of domestic disturbance where the husband had been twice caught and convicted of beating his wife with a predermined conclusion that no abuse was occuring.  

Me?  I am in the "recidivist camp."   Some actions are simply out of the ability of the perpetrator to control.  Put a Level III sex offender on my street and I am going to keep a very careful eye on that person around my children.

But perhaps that's just me.

"Fool me once, shame on, shame me, uh, can't fool again, no way!"

 

 

 

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