1. 89 Posts.
    Richard Russell
    Dow Theory Letters
    28 February, 2003

    Extracted from the 27 February 2003 issue of Richard Russell's Dow Theory Remarks

    Gold -- There's nothing more frustrating than sitting through the early (accumulation) phase of a bull market. And that's where we are in the gold bull market. Big money that is accumulating gold does not want higher gold in this area. And the question is -- is gold being manipulated to the downside?

    I suspect that the answer is yes. When you're dealing in the money market you're dealing in by far the biggest market in the world. Daily transactions in the currencies dwarf the daily transactions in stocks. And currently, tectonic movements are taking place in the world of money.

    Furthermore, I suspect that large interests are accumulating gold, and the last thing they want is for gold to move higher while they're in the process of accumulating the metal.

    This from today's Wall Street Journal, page C16 under "Currency Trading."

    "News that Russia plans to move more of its reserves into the euro at the expense of the dollar fueled declines in the dollar against the European currencies.

    "Russia's candid admission yesterday that it will cut the dollar portion of its foreign-exchange reserves to 50% from 70% and raise the euro slice to 30% from 25%, is feeding a growing sense in currency markets that such diversification by central banks is only set to gather steam.

    "While not hugely significant in and of itself -- Russia's roughly $47.8 billion in foreign currency holdings are just one-tenth the size of Japan's -- the unusually frank statement of intent from the Russian authorities has fueled questions in the currency markets as to whether other banks might follow suit."

    Russell Comment -- The three paragraphs above provide just a hint of the giant movement in currencies that lie ahead. While the US is the dominant military power in the world, this is not the arena where the coming struggle for power will be played. It will be played in the economic arena, and the measure of success or failure will be seen in the movements of the various currencies and gold.

    Again, I warn subscribers that the coming battle for world power is just beginning. The battle will obviously include the US and China with Russia and India both very much involved.

    The battle will be played out over a period, not of weeks or months, but of years. In the light of this coming long-term struggle, the daily and even the weekly and monthly movements of currencies and gold may prove to be insignificant. I'm talking about an historic struggle that will reshape the world and extended period of time.

    As for you and me, we take our long-term positions and wait. Patience will pay-off in this coming battle for world power-leadership and investment survival.

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