Richard Russell has warned investors to buckle their seats. It’s about to get “wild and wooly” in the second half of 2011, he stated in his latest newsletter to investors.
In the Thursday edition of his daily published Dow Theory Letters, the octogenarian survivor of WWII and countless bear markets of one asset class or another, the highly respected and longest-running financial newsletter writer, Russell, stated that he anticipates a 2011 second half replete of serious volatility. That’s great news for traders, but the rest of us, however, may not enjoy the ride—that is, those who don’t possess the precious metals, as Russell has repeatedly recommended holding for nearly a decade.
As the price and gold and, especially silver, took a plunge in the first week of trading in May, Russell stated he wouldn’t be surprised if the gold price retreated down as far as its 150-day moving average of approximately $1,400—a point of near perfect support on several significant pullbacks in the yellow metal since the summer of 2009.
But today, Russell’s intuition tells him that gold may be done consolidating and may again be poised to make another run from near present levels of between $1,480 and $1,510. Strong buying had come to the gold market at the bottom of the early-May sell off, and Russell knows that when an opportunity to slam the gold price in the midst of a deep (but not unusual) plunge in the commodities sector doesn’t materialize, something must be different this time.
“The latest action shows gold holding well ABOVE its 150-day MA and consolidating,” writes Russell. “Frankly, I thought gold was in for another test of its 150-day MA, but I may have been too pessimistic. Gold does not seem to want to test its MA (so far) this time, and that’s a bullish factor. As I write this morning June gold is up over 19 points, and there seems to be urgent buying in gold.”
Russell’s excerpts of his latest musings can be found on King World News.
Incidentally, precious metals market guru James Turk, of Goldmoney, has gone on the record this month with a similar assessment that the gold market won’t be correcting below the lows of May 5 of just above $1,460 for very long. Turk anticipates a break from gold’s seasonal low summer period, in which he sees gold rallying in the summer instead of drifting downward as has been the average case for the past 31 years.
Followers of Russell’s most recent thoughts on the state of affairs in the markets and American-led geopolitical events across the globe are not likely to be surprised by Thursday’s edition of his letter. In his January “predictions” letter, he dropped a bombshell on his readers. He wrote:
“This year might even be a black swan year,” Russell wrote. “Certain events are now in place, events that have never been seen before in human history. We are dealing with debts so monstrous, so huge, that most people can’t fathom them. The Muslim community is huge, and it has moved heavily into many European nations. The radical Muslims intend to express their world leadership. Dictators in North Korea and Burma and Iran and Africa are no longer safe in that they can no longer keep their populations ignorant and in slavery.”
All the makings of a “black swan” event are in place for 2011, he concluded.
Russell’s bulls-eye prediction of social unrest and revolution, kicking off, first, in Tunisia in February, which has since spread across North Africa and to the Middle East, is nothing short of remarkable for a man presumably not tied to any number of government intelligence agencies.
Given the backdrop of Russell’s demonstration of having a sensitive finger on the pulse of these markets and geopolitical events, coupled with FX Concept’s John Taylor’s recent warning of a significant “risk-on” unwind (though, he wouldn’t comment on the gold market, specifically) period for the markets in the near horizon, one has to wonder if another big move higher in the gold price is just around the corner.
The G-7 cartel and Chicago Mercantile Exchange have thrown everything they can at the gold bull, but it keeps on coming. Russell senses the “urgent buying,” as he wrote, foreshadows an event, or events, which could provide the catalyst for a stampede in gold, finally, from the retail investor.