The genius of Richard Russell can be found in his ability to observe. At least 30 years before China was on the lips of yet to be born hedge fund managers and venture capitalists, Richard Russell was providing clarity on the future of China while it was in the throes of Communist power. The following are excerpts of Russell's commentary on China during the 1960's. Russell himself never touts his record on his prescient views specifically on China, consider this among the first.
July 25, 1962. Issue Number 188. page 4.In this issue, Russell compares the conventional wisdom with what ultimately became the outcome which tended to be counter, or opposite to the prevailing view. One comparison that the conventional wisdom from was that from 1958-1961 “Russia [was] way ahead of U.S. in space. Communists taking over the world and apparently unstoppable. Everything [was] going Russia’s way.” The final reality was that by 1962 “Russian space progress greatly exaggerated. Russia runs into economic trouble. The rise of China as the possible great threat.”
May 25, 1965. Issue Number 289. page 4.“A fascinating aside on the gold picture is the news that Red China has now joined Russia as an interested accumulator of gold. According to the New York Times, China has recently purchased over $60 million of gold through the London Gold pool.”
December 21, 1965. Issue Number 309. page 2.“A strong, competitive, aggressive country tend to accumulate gold, while a country which is plagued by inflation, rising costs, ineffective budget control and political ineptitudes tends to lose gold.”
December 21, 1965. Issue Number 309. page 4.“China obviously wants to prolong the war [with Viet Nam], and it is this writer’s opinion that China sees the war as part of her economic battle with the U.S. China knows that continuation of the war will have the effect of bleeding this nation dry.”
January 11, 1966. Issue Number 311. page 2.“As I see it, China is very much afraid of war with the U.S. (see Sundry Comments), and the fact is that China has backed away from real confrontation with the U.S. whenever that possibility has arisen. On the other hand, I believe Russia would like the keep the war expanding in the hopes that the U.S. will ultimately turn her nuclear capabilities against China (note the reports of new giant Russian-made mortars in the hands of Vietcong). If Russia can bring this off, she will have rid herself of the Chinese nuclear and population explosion threat, and she will have emerged as the second or greatest power on earth.”
February 1, 1966, Issue Number 313. page 2.“It is well to remember that the Communists (ironically) view capitalism from an orthodox (pre-Keynesian) standpoint, and the Chinese in particular have always been fiscal conservatives.”
“An interesting aside is that renewed gold buying has come in from Red China (in the London Market). This prompted the London Economist to note ‘The buying represents not a switch out of sterlings, but out of Swiss francs. China has apparently been accumulating them in greater quantity than was generally suspected.’ This gold buying fits in with the writer’s thesis that China is fighting an economic war with the U.S., and that she wants ultimately to compete with capitalism in the marketplace. China’s unannounced motto might be, ‘Keep buying gold while the U.S. loses her own gold.’”
September 21, 1966, Issue Number 335. page 3.“The Third World force is to be China, the looming giant of the East. In time, thinks DeGaulle, the buffer force will be ‘cemented’ and grow powerful, in time China will be a superpower to be reckoned with…”
“Russia and China are fully aware of the power of the yellow metal, and both are making every effort to bolster their holdings. The scene is set for drama over Africa. But in this writer’s opinion, history will favor those who understand the old adage, ‘Gold will win.’”
February 17, 1967, Issue Number 349. page 2.“…Russia wants the war to continue, since it keep the U.S. ‘aimed’ continually at Russia’s real enemy, China.”
As with the first entry on July 25, 1962, it may be necessary to reflect on the conventional wisdom to determine if things going forward may not turn out as many analysts expect.
- Russell, Richard. Dow Theory Letters. San Diego, CA. www.dowtheoryletters.com. Accessed August 17, 2010.
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