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Do you know how nice June is in Minneapolis?  It is one of the few months all year that we can count on NO snow.  It was perfect weather today – like San Diego has all year long.  Susan and I ate at an outdoor restaurant and when we got home I went onto the three season porch (winter, mosquitoes, fall) and settled back to watch the Minnesota Twins battle the Detroit Tigers for first place in the Central Division.  Susan bounced into the porch and asked me “did you read Russell tonight?”  I said no, not yet.  She said, “He was really good tonight.”  She reads Russell every night.  I asked her, what did he say? She replied, “We’re all screwed.”  Colorful language but to the point.
So, I logged onto Richard Russell’s Dow Theory Letters to see what he had written.  I take Russell very seriously.  Are you curious?  Here is what he wrote today. He said, There’s always a fooler. Where’s the fooler this time? I think the fooler will be the stock market. The stock market will be considerably worse than the smart boys are figuring on. Deflationary pressures will be severe and the need to re-inflate will be more pressing than ever.

Gold will be needed – not as a safe haven against inflation, but as a safe haven against crushing deflation. Deflation will flatten everything in sight including base metals, commodities, housing, and job creation. The single island of preserving wealth will be gold. Unlike junk fiat currencies, gold cannot be devalued.

As I look ahead, the area that the experts do not understand is the stock market. Almost all the current opinions revolve around stocks remaining in a high-level trading range. This will prove to be an horrendous miscalculation.

Why do I think the stock market will be so rotten? Here’s why. Look at the chart of the Dow in the current issue of Barron’s. Or study the chart of the Dow below. If this isn’t the mother of all head-and-shoulder top-formations, I’ve never seen one. If this formation falls apart, I expect the break to signal at the start of a brutal decline in stocks. The first area of support is Dow 10,000. The base of the entire formation comes in at Dow 9800. If the formation breaks down, I think all previous plans, scenarios and strategies will hit a stone wall. Wall Street and public sentiment will turn black-bearish. Consumers will head for the storm cellars and once in, they’ll shut the door above them and lock it.

Question — Russell, you keep talking about institutional selling. But from every corner, we hear how rapidly the economy is improving. I don’t get it, if the economy is improving, why in hell would the smart money be selling stocks?
Answer — First, you must understand that Wall Street is interested in only one thing — MONEY. Wall Street feels no shame, no sorrow, no guilt, no remorse. Wall Street only has feelings for money. If the Street is truly bearish, if the institutions are negative, then their best strategy is to try to stir up optimism. And that’s exactly what they’re doing. Every plus in the economy, every improving statistic is blown up and fed to the media. You need an optimistic retail crowd to sell in to.
So shameless Wall Street creates the ideal background for selling stocks. Here look at the tell-tale evidence. “Distribution days” are days when volume expands on down markets. The profusion of distribution days is one of the studies that turned me bearish.  So what’s going on? Simple, the big money is unloading stocks all the while telling the public that the economy is improving. In the meantime, read Barron’s, read Smart Money Magazine, read Fortune or Forbes. And what are they writing about? Stocks, stocks, stocks to buy. This is clearly against my advice which all along has been — “Get the hell out of all stocks (except gold mining shares.”)
My position — Own gold and gold items and cash. Write this on your blackboard ten times.
Later this week, I will be writing my monthly hard copy which will be inserted into the packages that we give away at the upcoming Agora Conference in Vancouver.  I might as well kill two birds with one stone and share the opening from the hard copy newsletter with you here.  It is a short review of the “basics” and should help you focus on the big picture.
The Big Picture
It’s not very complicated if you are rational and allow yourself to see through the deception.  Mathematically, we are in a mess that there is no easy way out of – probably no way out, period.  The current Federal deficit is slightly over $13 trillion and projected to reach $20 trillion by the end of the decade.  The projections are unlikely to be met – they are too low.  The $20 trillion number does not take into consideration the deficits in Social Security, Medicare, Medicaid, pension plans, state bail outs and future “TARP” injections to keep the economy from collapsing.  The total comes in at well over $100 trillion, give or take.  Give or take what?  We’re bankrupt!  Raising taxes won’t solve a thing.  They could tax 100% of all income and still couldn’t balance the budget.
The government faces two choices.  Default, and declare bankruptcy, which they never do, or wildly inflate to buy more time.  That is the time-proven choice of all governments.
Since inflation is the preferred political outcome – maintaining your wealth in dollars, or any fiat currency for that matter, is a sure way to lose out, big time.  Still, that is exactly what most people will do.  If you are insightful enough to transfer your wealth to precious metals now, you will survive intact, financially.  Those who don’t – well the outcome will not be pleasant.  That is what is in store for the vast majority of Americans.
It’s not like there was no warning.  What do you think that the rise in gold for the last 10 years is telling you?  It’s telling you that it takes MORE dollars every year to buy an ounce of gold.  In plain language, the dollar is losing purchasing power to gold.  Forget the CPI.  Look to gold for the real trend.  The money supply is rising and it’s falling.  How is that possible?  It depends on which money supply we’re talking about.  The Fed’s Adjusted Monetary Base has expanded by nearly $1.2 trillion in less than 18 months.  That an increase of nearly two-and-a-half times.  That is new money that the Fed has injected into the banking system.  When the banks get around to lending it in their “fractional reserve” fashion, the inflationary flood gates will be open.  Look closely at the Fed graph, below.  We have never experienced an inflationary action like this before.  “Helicopter” Ben Bernanke is living up to his promise – he is relying on the “printing press” and (figuratively speaking) dropping hundred dollars bills out of helicopters.

I expect The Fed to seriously add to this inflationary monster later this year, to keep the economy from plunging into deflation.  The result will be massive inflation – which will hit the economy shortly.  Not all things will go up in price.  Stocks, real estate and non-necessities will fall but basics like food and gasoline will rise.  And so will gold, silver and oil.  This type of inflation is not consumer driven.  It is a currency event.  It will be the result of the creation of too many dollars leading to the dollar’s collapse.  It must.  And since gold is denominated in dollars, as the dollars loses value, gold automatically will rise.
But gold’s rise won’t be just in dollars.  Gold is rising in all currencies and that is very important for you to keep in mind.  The British, Swiss, Germans, Russians, Arabs, Indians and Chinese are all trading in a portion of their paper currencies for physical gold.  And that includes the central banks, who are buying gold instead of selling it for the first time since the late ’70s.
Gold is NOT in a bubble now
We are in the early stages of a generational bull market in gold and there is no bull market like a gold bull market.  Most bull markets are driven by greed.  A gold bull market is driven by FEAR – and some greed to.  It is a very powerful combination, one that will push the price up well beyond what most people think possible.  $850 gold, in 1980, doesn’t seem such a big deal now, but in 1971, the rise from $35 to $850 was unimaginable.  Super-imposed on the current bull market, which started with gold at $252, a comparable rise would push gold up to $6,100.  Gold could easily rise by another 500%!
That would peg silver at over $100 an ounce.  These are NOT pie-in-the-sky numbers.  They may prove to be too low. They are no more absurd today than gold reaching $850 an ounce was in 1971.

How will I know when gold is in a bull market?  I won’t, so ask me again when it hits $5,000 and I will try and give you an answer then.
Gold is winning by default
Where else can you safely and sensibly put your money?  Not in stocks.  Not in real estate.  Not in bonds, which are paying practically no interest, while inflation is rising at 7%, according to John Williams’ brilliant website, Shadowstats.  Williams’ numbers are honest and accurate, not the lies that emanates from the BLS.
You need to diversify, but not into different ASSET CLASSES.  You need to move your wealth into commodity-based hard assets and diversify within that asset class.  That is the only class of assets that are now in a long-term bull market.  You should move most of your assets into gold, silver and mining shares (with a sensible cash position too). This is exactly the strategy that Richard Russell is touting – gold and cash!  Even Jim Cramer is now advocating that you put 20% n gold.  First, build a solid BASE of physical metals in your possession that is fully paid for.  Then buy an assortment of gold, silver, uranium, oil and rare earth mining shares.  Split it up between majors, juniors and exploration companies.  Remember, this is the only ASSET CLASS that is moving up, and has been for years and is still in the early stages of a primary bull market.  Avoid all other asset classes, whose cycles are on the downturn.
Gold is showing you the trend.  In 2000 the Dow was around 10,000 and gold was $250.  It took 40 ounces of gold to “buy” the Dow.  Today the Dow is 9,927.  There has been NO GROWTH FOR TEN YEARS.  Gold is $1,244.  Today, it takes just only 7.9 ounces of gold to buy the Dow.  Gold has outperformed the Dow by five times in the last 10 years.  I think it can show the same percentage gain in the next five years too. Gold’s rise is not an accident, it is a warning.  Are you paying attention
I am not giving you a sales pitch.  This is not wishful thinking.  This is not doom-and-gloom.  This is a fact!  Start thinking for yourself and if your money manager and stock broker are not moving you into precious metals, stop letting them make all of your financial decisions for you.  Stop listening to the dolts on CNBC.  Stop listening to the bullion bank analysts who have been wrong, wrong, wrong in their predictions on where gold was headed for a decade.  When John Paulson and Jim Rodgers are telling you it’s time to buy gold, listen to what they say.  Take their advice.
If you want safety and if you want to preserve your wealth then you must move a large portion of your wealth out of dollars and into “things,” tangible things like gold and silver.  If you must be in dollars, then buy oil companies and gold and silver mining companies.  Buy rare earth companies and uranium companies.  These are solid investment choices to supplement your physical holding of gold, silver, platinum and palladium
Along the way, you might even consider calling us at 1-800-822-8080.  We are very professional in the way in which we conduct our business.  We are staffed with experienced brokers, not order takers.  Our prices are very low and competitive.  In addition, we do not charge a buy-back commission on metals purchase from Miles Franklin.  That will save you a great deal of money when you decide to sell.  Taken together, the bid and ask, our prices are the lowest you will find.  In addition to low prices, when you buy from Miles Franklin, you will not sacrifice service or problem solving.  We take care of our clients and the proof is in the fact that we sport a Better Business Bureau rating of A+. We have worked hard to be as good as we can possibly be and the reward is endorsements by Doug Casey, David Morgan, Robert Prechter, Rick Rule, Richard Maybury, Bill Fleckenstein and many other highly regarded financial newsletter writers and investment icons.