Richard Russell- Update Gold, Silver, US Propaganda

Russell: “It’s not the troubling news that’s making the hair on the back of my neck stand up, it’s the lying and BS and propaganda that I can’t stand.  For instance, we’re being told bold lies about the US economy.  From what I hear and what I can dig out, the US is in recession and has been since late 2007.  Bernanke left office believing (hoping) that the US economy was improving.

Now Janet Yellen is Chair of the Fed, and she is hoping that Bernanke was right.  Yellen notes that retail sales and housing and job growth and industrial production have slowed, but she blames all this unsatisfactory data on the rotten weather we’ve been experiencing.  The latest is that Yellen will continue tapering.  Good luck Madam Yellen.

The big picture is really that the US has been undergoing deleveraging and deflation.  Meanwhile the Fed, which is terrified of deflation, has been trying to create its beloved two percent inflation.  But so far the Fed has failed. The Fed has failed in its frantic attempt to produce inflation because the current forces of deflation are overwhelming the Fed’s inflationary efforts.

And I’m wondering how long it will be until news of the ongoing US recession bursts out in the open.  Unemployment in the US is embarrassingly poor, retail sales are weak, hey, it’s easy to blame the weather.

The stock market is climbing on the basis that Fed stimulus will continue.  No money manager can afford to be out of the market while the Fed is creating new trillions of dollars.  Seeing the parade of new highs in many of the major stock averages, Joe six-pack is jumping into the market in the hopes of recouping some of his 2008-09 losses.

So what is a poor middle class citizen to do?  You can’t find a job, and with interest rates at zero, you can’t stir up any income, and the food stamp lines are running around the block.  My advice is to be patient, hold physical gold.

I note that China is doing two things: it is building up its gold reserves, and it is building up its military.  Furthermore, I believe China is getting ready to make its currency, the yuan, convertible.  I’ve been saying this for years, and I’ll say it once more: China is preparing to make the yuan the world’s next reserve currency.  And I’ll ask this question once more — would you rather own a yuan which is backed by gold and a powerful military, or would you rather own a dollar, which is backed by debt and a shrinking military?

I have become increasingly interested in silver.  Unlike gold, silver is actually used up in manufacturing.  Silver is a great conductor of electricity and has a thousand commercial uses.  From what I understand, there is currently a world shortage of silver.  The US’ reserves of silver are practically depleted.

Below we see a chart of the silver trust, SLV.  SLV has now surged above both its 50-day and 200-day moving averages.  Note that after hurtling its 200-day MA, SLV has tested its 200-day MA on numerous occasions.  I like SLV and think it is a buy.

Below silver (SLV) pitted against gold (GLD).  Silver is beginning, on a relative strength basis, to outperform gold.  This is a second reason to take a position in SLV.

Fired up by QE, the stock market pushes ahead.  Meanwhile, the Fed comforts itself by excusing the lousy economic data on the basis of the lousy weather.  But beneath the latest statistics, a recession continues.  As the old song goes, “It’s easy to blame the weather.”

I continue to believe that institutional distribution is going on. … The stock market continues to be levitated by the Fed‘s quantitative easing.  The risk to reward ratio for being in the stock market is negative.

Meanwhile, the US economy remains in recession.  And once the truth breaks out, the stock market will slip into crash mode.  The stock market is up on Fed manipulations, and the economy is up on lies and propaganda.  It’s a poisonous combination.  Gold was higher today and so were the gold miners.  Stay with your bullion and other gold items.”