BEST OF RICHARD RUSSELL

November 12, 2007

The great primary bull market in gold is finally beginning to heat up. In fact, gold is now straining against its boundaries of resistance. This morning gold was selling for as much as 843, or within easy "shooting distance" of its 1980 record high of 850. This may be the time to repeat the words of W.D. Gann. Mr. Gann is considered by many professionals to have been one of the greatest commodity and stock traders (and thinkers) of all time. Here are Gann's words (courtesy of my old New York friend, Ron Rosen).

"When a stock or a commodity advances into new territory or to prices which it has not reached for months or years, it shows that the force or driving power is working in that direction. It is the same principle as any other force which has been restrained and breaks out. Water may be held back by a dam, but if it breaks through the dam, you would know that it would continue downward until it reaches another dam, or some obstruction or resistance which would stop it.

"Therefore, it is very important to watch old levels of stocks and commodities. The longer the time that elapses between the breaking into new territory, the greater the move you can expect, because the accumulative energy over a long period naturally will produce larger movements than if it only accumulated during a short period of time."

Russell Comment -- If gold can close above its 1980 peak price of 850 -- it will have overcome a resistance level that has held it back for 27 years! Thus, a decisive closing about 850 could bring about at least a doubling of the current dollar price for gold.

Suddenly gold is in the news. The public is reading about gold an actually asking questions. "Why is gold going up?" "What's the meaning of the rise in gold?" "Should I buy gold?" "Is there something wrong with the dollar?" "Where does one buy gold?" "Is silver related to gold?" "How much does it cost to buy a gold coin?" "What is GLD?" "Who sells gold coins, and if I buy a few, where should I keep them?"

It really is sad. Here's gold and silver ("specie") mandated as the only money by the Constitution of the United States. Yet our citizens have been kept in the dark about gold for generations. Instead, Americans have been touted on the value of fiat money, rudderless money. This fiat money is created by a private banking cartel (the Fed). This transfer of US money-creation has never been authorized by a Constitutional amendment.

I've said this before, but I'll repeat it -- the whole system of fiat (paper) money is the greatest fraud ever perpetrated on the American people. Our defense against this "counterfeit" money is, and always has been, Constitutional money -- gold and silver. Federal Reserve Notes (currently termed "dollars") are a blatant lie. Today, rising gold is dragging that lie out into the open. Ultimately, the truth will out. Rising gold is shouting the truth -- "gold is money, Federal Reserve Notes are a lie and an abomination."

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