"It [gold/stock ratio] is telling us that for the foreseeable future (until the next signal), if we do anything we should do it in stocks." page 3.
"Slowly, very slowly, it's dawning on the world that we're witnessing one hell of a bull market-in gold. I've been writing pages and pages about gold in each Letter, trying to get new subscribers in the metal (or the coins), trying to get older subscribers to STAY in gold. Happily, a large percentage of my subscribers are now sitting with large gold positions. And the paper profits (in terms of dollars) are mounting." page 5.
This commentary seems odd because in Letter 745, Russell goes on to say:
"At any rate, it is a bearish omen when the [gold] open interest stays high in the face of a persistent decline, and that is what has occurred." page 6
Russell called himself to task by asking the following question:
"Question: Russell, you were so hot on gold a few months ago. Gold was 'real money,' you said. Gold 'would save the system,' you said. How can you just "turn off" on gold?"Answer: I haven't turned off on gold, I've turned off on gold at this time. The market isn't like your wife or your daughter who you love through thick and thin. We're dealing here with correct procedure and purchasing power. The fact that I advocate gold-backed currency has nothing to do with the fact that I think gold is in a bear trend over the coming months. In this business, you had better learn that the trend makes you the money, not the item. I'd rather buy Cesspools, Inc. if that stock was going up than IBM if IBM is heading down." Page 7
"The GSA [Gold Stock Average] has collapsed, and is now down to its previous low for the year recorded last April. Bullion has obviously held up better than the gold shares, but so far the downside non-confirmations by bullion have failed to halt the decline. This kind of action is always indicative of a weak market, and it just seems that there are still too many optimistic gold-holders around." Page 6.
- Russell said that "Greed and options don't mix." My impression on this remark is that I always thought that the purpose of options is to get exaggerated gains with the trade-off being no equity. Seems to me that greed and options go hand in hand.
- Dow Theory Letters are available at http://www.dowtheoryletters.com/