Here is an extract from commentary posted at DowTheoryLetters.com on15th August 2003:

Not much surprises me these days, not even a blackout of much of the eastern United States and Canada (all of which interfered with the Internet, by the way). But I admit to being surprised when I looked at the latest figure for M-3, the broad money supply. For the week ended August 4, M-3 grew by an astounding $49.9 billion. At that rate, M-3 would be up over $2.5 trillion during a 12 month period. Fed Chief A. Greenspan isnt just opening the spigots, he's ripped the spigot right off the bathroom sink. This is a flood. If it was my bathroom, I'd make an emergency call to the nearest plumber.

If liquidity is the food that feeds an economy, then the US economy should be going "great guns." And inflation should be leaping higher. And gold should be surging.

So I must profess that I'm just a bit mystified by why none of the above is taking place. Oh, I know -- everything takes time -- more time than you think. Yeah, right.

As I scribble this morning, I'll bet Greenie is just climbing out of his morning bath, maybe toweling off as he picks up the Wall Street Journal -- but what could the Green One be thinking? Wait, I know -- he's thinking, "Heh heh, these reporters are making fun of me because they think I've lost control of the economy. Well, think again, you goof-balls, because Uncle Alan has a little surprise for you. It's called super-ultra-mega liquidity, and pretty soon you'll be drowning in a flood of bank credit that will swamp the system and send everything that's tradeable heading north. Of course, that will set off inflation again, but we know how to handle that -- just up the rates a bit, and inflation will hit a brick wall."

If liquidity is the fuel under the markets, why aren't the markets heading skyward? Well, they may do that yet, but there seems to be some kind of mysterious brake that is holding the markets back. What could that brake be?

Here's a theory. A certain powerful sector of the market is looking far ahead, and it doesn't like what it sees. It sees a situation wherein the US can't keep swapping its dollars for the rest of the world's merchandise and services. At some point, the world won't want any more dollars.

How can that be? Can't nations like China and Japan and even the European nations take in dollars, then turn around and buy US Treasury bonds with those dollars? After all, that's what they've been doing for years. Or can't they take those dollars and buy US real estate or US corporations or US stocks?

What, you say that they'll be afraid to buy more US assets because they believe the good old US has become a credit risk and even an asset risk? You say that the US is so debt-laden, that our foreign friends will believe that all of America is a risk, much as every banana republic represents a risk.

Well, that's a thought, but Russell, you're thinking too far ahead. Let's just deal with what we've got or what we can see now.

OK, that suits me. So I'm looking at the stock market a few hours after the opening. The Dow at this morning's opening was only 13 points away from a new high -- a new high above its June 17 closing high of 9323.02. I thought the Dow might climb above that number right at the opening. But no, the Dow is up only 5 points, even with the long T-bond up almost a full point (which, of course, brings long rates down).

Aw, there's no sense of writing a lot about this market at this time of the day. This is a market that can be down 75 points in the morning and then up 125 points by the close. There are now about 5,600 hedge funds in operation with more being added every week. These hedgies are pulling their hair out trying to capture some profits, and they don't care if they take their profits during today, next week or next month. What the crave is activity and broad movements in the market. A trading range is their nemesis, so they'll do what ever they have to do to stir up some action.

Right now, as I see it, there's a lot of "stealth" around. What do I mean by "stealth?" The bear market has lapsed into a "stealth bear market," meaning that the bear is hiding and well, he's just patiently awaiting his time and his turn.

There's also a "stealth bull market" operating, and I'm referring to the sneaky bull market in gold and gold stocks. At its April 2001 low, gold was selling at 260 an ounce. Today gold is selling at 365 an ounce. That's a gain of 40% since April 2001. I'd call that a bull market.

At its October 2001 low, the unhedged "gold bug's" gold average was priced at 36. Today HUI is at 181, That's a rise of 405%. I'd call that a bull market, wouldn't you?

So if gold and gold shares are in a bull market, how is it that nobody is noticing? And if, by some chance, they do notice, how is it that they sneer at gold and claim that it's just a commodity, and that it's going nowhere?

Well the reason there's no publicity being given to the bull market in gold is that gold is the "uninvited guest" at the Fed's party. But you can't fool all the people all of the time. Lincoln said that, and Lincoln knew what he was talking about.

You see, I have a theory, and my theory is that gold, even the idea of gold, is embedded deep in man's psyche. It's almost in man's DNA. The lust for gold opened up Alaska and the Yukon territory. The search for gold opened up California and the West. The search for gold made South Africa rich. The first metal mentioned in the Bible is gold. Steel may build factories and apartment buildings, but gold builds nations. In other words, you can BS the public about gold for a while, but not forever.

Here's the central banks' problem. If gold heads higher in a dramatic way, people will start asking questions. "What's happening, why is gold rising in price? Is something wrong with the dollar? Why has Rolex raised the prices of its gold watches?"

So at this strange and peculiar time in history, government's don't want higher gold. In fact, they don't want attention directed to gold at all. "Let it lie," says the Fed, "Let it do what it wants as long as it's not noticed by the crowd."

Which is fine with Richard Russell and his subscribers, because it means that we can continue to buy "cheap" gold and "cheap" gold shares. And what's better than buying "underpriced merchandise" in the early stages of what promises to be a great bull market?

As we near the close of today's session, I feel there's something positively eerie about this market. Day after day, week after week, the Dow (the most watched and studied stock average in the world) flirts with its June 17 high, glides above it, bounces around it, but refuses to close above it.

What is the Dow trying to tell us? From all quarters we are told that the economy is getting better. The M-3 money supply is inflating like a giant balloon. The almost unanimous opinion of Wall Street's most respected analysts is that 1994 will be a good year.

I guess we can chalk up today as just another day when "The Dow is marching to the beat of a different drummer." You want drama? You want mystery? You want the stock market to weave an amazing story? Ladies and gentlemen, you're seeing and hearing that story now.