Today, nobody's got any cash. And if they do have cash, they don't know what to do with it. We just sold the house I've been living in for the last 30 years. And I wonder what to do with the money we'll receive on the sale. Should I try to bring in some income? Or should I play it as safe as I can? Thirty years ago I wouldn't have had this "problem." I could have bought government notes or bonds and received safe income. Today I will wait with the money and see what comes up. But waiting with dollars is a risk, because I have no faith in the dollar as a store of value.

Maybe I should just say, "The hell with it," and buy more gold. With T-bills at a negative yield, I'm not sacrificing anything when I buy gold -- at least gold can't go bankrupt. And great -- gold is outside of the banking system. No damn fool can devalue gold. But I don't trust the government to refrain from devaluing the dollar (after all, Roosevelt did it, and Obama seems to follow Roosevelt's lead, although FDR was a conservative compared with O-bummer).

I watch what Bill Gross, master-mind of PIMCO, is doing. He runs the world's largest bond fund, and he must think in terms of both safety and income. So what is he doing? From what I gather, he's getting rid of US government debt and buying non-dollar bonds. Somehow, bonds of any kind don't appeal to me. Gross likes the preferred of some banks, and that's not a bad idea. But it sounds a bit risky and mysterious. After all, who knows what these banks will come up with next? I just don't trust them, and I'm convinced they're still loaded with toxic assets which they refuse to mark to market.

I think I'll do what I've been recommending all along. I'll sit with mostly gold and the rest in cash. Cash isn't worth much these days, but it does allow you time to think. And best of all, and miracle of miracles, people continue to accept cash (Federal Reserve notes) for items of intrinsic value such has gold, silver, real estate, diamonds, guns, art objects, all items that should be worth something 25 years from now.

I've said this before. Up to now the goal in investing was to produce a profit. You hoped that whatever you bought could be sold in a year or so for more than you paid. I don't think that way any more. I think in terms of how I can avoid losing purchasing power. It's a true reversal -- from how to win it -- to "how not to lose it."

And how about this? The most widely-held opinion on earth is that the US dollar is headed for oblivion. But I believe in charts and I believe in the flow of funds. The daily chart (going back six months) below shows the Dollar Index zig-zagging higher and advancing above both its 50-day and 200-day moving averages. Could everybody be wrong? Those shorting the dollar (buying euros in quantity) have been killed. Maybe there's something going on with the dollar that we don't know about. At any rate, I'd buy this chart before I sold it. So you know what? I'll stay with US dollars for a while. Why? The chart tells me it's OK.



Gold -- is tricky now. The central banks may be buying it instead of selling it, but they'd much rather gold stay "put." Using GLD as a proxy for gold, we see GLD has support at 108. It's tested 108, and each time 108 has held. The upside breakout from this pattern comes in at 110. MACD appears to have bottomed. I"m just going sit tight and see what happens.


What's with Doctor copper? Copper is used in almost everything from cars to refrigerators. Analysts watch copper, using it as a barometer of world economic activity. Which is why they call it "Dr. Copper." When the doc suffers a sharp decline as now, analysts ask, "Is something wrong?" It may just be that China is cutting back on stockpiling copper.


Latest Russell thoughts -- I see deflation directly ahead, and after that inflation. There is usually a 1.5 year or more lag between the time the Fed floods the market with liquidity and a rise in inflation. This means that inflation should hit in late-2011 or early 2012.

People have an incorrect concept of inflation. Inflation is an over-production of the currency. The usual result, many months later, is a rise in prices. The public mistakenly believes the rise in prices is inflation. But inflation starts with money creation, the result is a later rise in prices.