rr on gold - the only person i take notice of.

  1. 1,816 Posts.
    Richard Russell
    Dow Theory Letters
    23 January, 2003

    GOLD is in a Primary Bull Market

    Extracted from the 22 January, 2003 issue of Richard Russell's Dow Theory Remarks

    Gold -- The operative concept is simple enough although few people believe it. What's the operative concept? Here it is --


    I note people trading in and out of gold shares, trading in and out of gold futures, even buying and selling gold coins. This is a mistake -- it's a mistake based on the fallacy that you can predict or out-guess an item that is in the early stages of a primary bull market.

    What this in-and-out trading usually results in is the trader trading himself out of the bull market and losing his position in the bull market. The way to invest in a bull market is to take your initial position, as I hope all my subscribers have done, and then ADD to your position on corrections or declines.

    I've often stated that it's exceedingly difficult to ride the bull to somewhere near the ultimate high. All the "experts" will tell you that "the market is too high," "the market is ahead of itself," "the market is not being confirmed," "gold shares are behind the metal so beware," "silver hasn't confirmed gold," and so forth. What these people forget is the basic thesis that in a bull market gold goes up one way or another, and the stocks, one way or another, will rise with the price of gold.

    There's no law that states that gold and gold shares have to go up in unison. The idea is to load up on gold and gold shares and ride the bull. That's the idea. It's a simple idea. Yet few people follow it.

    This is a point & figure chart of the Amex gold bugs Index of unhedged gold shares. What we see here is a huge base. The breakout will come at 156 on the HUI.

    Nickoo's comments: RR is right. Forget the people who tell you to trade the gold bull- it is the wrong strategy. Get set in this infant bull, and ride it all the way up to the top. Trading will lead to lost opportunities, and a negative state of mind.

    As an example of this, look at those people who were holding OXR, and decided to trade it. Many (as stated on HC) got out at just above 40c, and are as yet to enter again (OXR now in the high 50s) . In all likelyhood, most of them will never enter again... they feel like OXR has cheated them, and they're likely to pray it falls for the rest of the bull market.

    End result? Not only have these individuals missed out on peotential profits, but they've also built up resentment against OXR, and possibly also against the gold sector in general.

    Make no mistake about it- trading this gold bull market will not only lead to financial pain (in the form of lost opportunity), but will also lead to a negative state of mind.
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.