The real up-move in gold lies ahead.Re: Where's Richard Russell
by: sophocles44 12/16/04 12:35 pm
Msg: 482038 of 482051
Gold -- The big picture in gold is that gold is the cheapest thing around. I get e-mails every day from subscribers who complain that their gold shares aren't rising, that gold isn't exploding, that Newmont is not hitting new highs.
Gold is in a bull market. And it's an unfinished bull market. The gold picture reminds me a lot of the stock market situation in 1957. In the summer of 1957 the stock market caved in during a vicious secondary correction. The consensus in the summer of '57 was that the bull market that had begun in 1949 was over. I disagreed. I insisted that the great bull market was still in force. I based my view on the fact that the stock market has never had a third phase explosion. This bull market, I stated, would end like every other bull market -- with a recognizable highly speculative third phase.
Following the end of the secondary correction (it ended in the fourth quarter of '57), the market headed higher and into a speculative third phase. I started Dow Theory Letters in 1958 on the basis that the bull market was still alive, and that a third phase of the bull market lies ahead. I even wrote my first piece for Barron's based on my insistence that the bull market was still alive and a third phase was still to come. Happily, I proved to be correct, and the article that I wrote for Barron's put me in business.
I apply that same reasoning to the gold market of today. So far, we haven't seen anything yet that could be called a third phase of this gold bull market. In fact, I believe we are at the very beginning of the second phase. This second phase (which is usually the longest phase) could last for many months or even years before the third phase of the gold market makes its appearance.
Sure it will be hard to hold gold and gold shares during the second phase of the gold bull market. It's always hard to sit through the second phase of any bull market. It's in the second phase where the most vicious secondary corrections appear. In the second phase, the bull will use every trick in the book to get investor's "off his back." And the bull will usually succeed. Nevertheless, I'm convinced that the bull market in gold remains in force, and I'm equally convinced that the real up-move in gold lies ahead. Basically, we're still in the accumulation phase for gold and gold shares.