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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

 
Best of Richard Russell
February 7, 2011
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Day after day the US dollar continues to sink, not precipitously, but steadily. Did you notice in Obama's State of the Union speech that he never mentioned the dollar. The reason is obvious, the administration and the Fed and the Treasury WANT a lower dollar. Their task is to allow (force) the dollar down without alarming Americans and more importantly, not alarming our creditors.

There's no problem with lying to Americans. Americans have no idea what the dollar is doing. Furthermore, Americans are told by their government that there is no inflation. The government's proof is the CPI (Consumer Price Index), which is manipulated to show that inflation in the US is zero (food and energy are left out of the CPI).

But the rest of the world knows that the dollar is acting like a sinking ship. And they are either swapping dollars for other currencies or using their dollars to buy tangibles such as precious metals, factories, arable land, and in-the-ground reserves. Or if we're talking about knowledgeable private citizens, these people are trading their dollars for gold, precious metals, works of art, jewelry, diamonds, classic cars or anything that can be considered tangible value.

Now understand this. When extreme currency devaluation occurs, stocks (the bluest of dividend-paying blue chips) can become inflation hedges. And that's exactly what I think we've been seeing in the stock market as the Dow pushes higher.

Because of the micro-dividend yield and because of divergence and because of non-confirmations, I've stayed out of the stock market. Obviously, in retrospect, that was a mistake. The stock market got whacked today because of a flagrant Dow Theory non-confirmation.

But I'm changing my position on the stock market. I'm now recommending buying the Dow in the form of the diamonds (DIA). I believe the Dow (but not all stocks) is being seen as a hedge against the dollar and as a safe-haven for those who perceive that the dollar as steadily losing purchasing power.

In the very big picture, I believe Americans are facing one huge and daunting problem -- the steady loss of their purchasing power via a declining dollar. What we've been seeing is the Dow rising as it adjusts to the diminishing purchasing power of the dollar. To put it simply, the Dow alone (but not most stocks) has been acting like a currency hedge.

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