Richard Russell: Gold and Silver “Will Survive”

Release Date: 
Friday, October 17, 2014

Gold and Silver Prices

Gold prices posted gains this week in volatile trading. “Gold edged lower on Friday as shares rebounded, but it was still set for a second straight weekly gain as concerns over the global economy have raised speculation the U.S. Federal Reserve could keep interest rates low for longer…Gold has benefited from the low interest rates and increased central banks' liquidity that have prevailed in the years after the 2008 financial crisis. On Thursday, the head of the St. Louis Federal Reserve Bank, James Bullard, said the central bank may want to keep up its bond-buying stimulus for now, given a drop in inflation expectations.” (“Gold set to post weekly gain on uncertain U.S. rate outlook,” Reuters, 10/17/14.)

Gold finished the week up $15.90, at $1,239.20. Silver prices were down $0.05, closing at $17.37.

Richard Russell: Gold and Silver “Will Survive”

Veteran newsletter writer and publisher of the Dow Theory Letters, Richard Russell, explained why it is important to hold gold and the likely return of a gold backed reserve currency in his most recent letter to subscribers.

“With the specter of war and the staggering expense of war, we might have expected gold to surge higher. So far gold has held above its support level of 1200. It will take a rally above 1250 to send gold into a definite bullish trend. In the meantime, I never sweat holding positions in the precious metals. They form the base of the world’s monetary system. They have a 5000 year history of sustainability, which is good enough for me.”

“I believe an entirely new system will be needed in view of the world being choked on ever-increasing debts. But before a new system can be instituted, the old (current) system will have to be destroyed. This, I'm afraid, will necessitate a brutal bear market that will bring about the absolute need for change. Change will be very painful. I don't know what will survive the coming changes, but I'm convinced that there will be two survivors – silver and gold.

“In its battle to make its fiat currency the only legal currency, the Fed has adopted a strategy of denouncing the precious metals. But ultimately the truth will win out, and the fiat dollar will join all the other dead fiat currencies that have become footnotes in economic history. Remember every currency that has left the gold standard has died, with no exceptions. Sooner or later, a new world reserve currency will be adopted. It will be at least partly backed by gold.” (“Dow Theory Letters—Letter 1551,” Dow Theory Letters, 10/10/14.)

Murenbeeld: $1,335 Gold

Chief Economist with Dundee Capital Markets, Martin Murenbeeld discussed his price targets for gold in an interview this week.

“It seems hard to find someone who is bullish on gold prices these days but this economist thinks $1,335 gold may not be far-fetched. ‘One of the things that tend to be overlooked…is that the real interest rate in the U.S., particularly at the short end, is going to remain negative right through 2015,’ he said. ‘Furthermore…you will have significant additions to global liquidity and that is one of the key factors in our models and our forecast [for gold].’” (“Why Murenbeeld Thinks Gold Will Hit $1,335,” Kitco News, 10/16/14.)

Spread of Ebola could have Dire Consequences for Economies

Some experts are warning that the spread of the Ebola virus could have devastating consequences for global security and economies.

“As the Ebola virus spreads in and beyond Africa, it’s raising the possibility of a global pandemic that U.S. intelligence agencies have warned is among the greatest potential threats to global security. As health workers, diplomats and U.S. troops fight to contain and defeat the virus in West Africa, there now are cases in six other countries; a second U.S. case has emerged; and the World Health Organization puts the death toll at more than 4,000 and rising.”

“A pandemic, whether naturally occurring like Ebola or a synthetically created biological weapon, can paralyze economies, fray societies and destabilize countries…Pandemics do far more than disrupt daily routines. They can shape the course of history, triggering political upheavals, hollowing economies and snuffing out entire civilizations. The Black Death took 75 million to 200 million lives in 14th-Century Europe and killed half the citizens of Paris. Smallpox brought by 16th-Century Spanish conquistadors and other European settlers helped eradicate the Aztecs and Incas and decimate Native American tribes. The influenza epidemic of 1918 to 1919 killed hundreds of millions.” (“Ebola’s Toll Threatens Security in Interconnected World,” Bloomberg, 10/13/14.)

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Goldline provides a wrap-up of the week's precious metals news along with important commentary on the American Advisor Week in Review audio program. Listen to the show below:

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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