By Richard Russell in Dow Theory Letters:

Question -- What would it mean if Industrials and Transports broke out to joint new highs?

Answer -- I think it would mean that the Bernanke Fed was beginning to win the war against deflation, and assets were once more beginning to inflate. In that case, gold should move higher.

Question -- What would it mean if this advance topped out, and the bear market was taking over again?

Answer -- I think it would mean that the Fed had lost its battle against inflation. If that was the case, I believe the Fed would spend even more, there would be even more stimulus programs and interest rates would remain at zero "for the duration." In that case, gold should move higher.

Crux Note: Learn more about the excellent Dow Theory Letters here.

More from Richard Russell:

The White House's secret plan for the dollar

The great Richard Russell: The bear market rally is topping out

Richard Russell on the dangerous secrets of the Federal Reserve