Traders are advised that unless they have exceptional experience not to trade against the basic trend. Those trades against the market trend will not be expected to be as productive as those with the trend.
Gold: Up Investors should focus on Buy signals. Silver: Up Investors should focus on Buy signals. Investors should add to positions on Buy signals. The only reason we put the Do Not Buy signals in is that we have had requests for "sells" by those that trade. That said, most investors should not sell in a Bull market.
I was all set to write Friday morning as the indicators on Gold were giving some extremely positive signs. Then the employment numbers came out and all went straight up, as the dollar went back down. The economic gurus missed the employment number by a mile. At least this month they got the sign right. The same group is also forecasting a wonderful U.S. economy, no problems with the U.S. deficits and that the dollar's correction will be moderate and painless.
The ECB did not raise rates last week, as we suggested would be the case. Problem with the dollar is not that the European interest rates are too high. The dollar's problem is that U.S. interest rates are too low. Greenspan's words are trying to prepare people for a rate increase. If you listen to him, a subtle shift has taken place in his words when compared to a year ago.
Gold gave multiple buy signals this past week, as shown in the charts. One reader asked if we would indicate the date of the last signal and that is done in the chart. I hope to be able to remember to do so in the future.
Gold can certainly be bought on any days that the price is down. Waiting to catch a "break out" will likely be expensive, and nearly impossible to do. Early on we talked about this Gold correction creating multiple buy signals before it is complete. I would expect one more. The latest buy signal was at a price below the previous, and the next should be at a higher price than this last signal. That may be the completion of an abc correction in Elliott terms, but I do not follow that methodology that closely. Any of you that do might let the rest of us know.
What can one say about Silver? Somebody loves the stuff and the price acts like a hot NASDAQ stock. Continues to be a baffling experience.
The chart is showing an increasingly erratic pattern. That development might suggest some differences in opinion between buyers and sellers. That strong move on Friday on the job number suggests how "popular" Silver has become. Indeed, it might be too popular at the moment.
Both indicators suggest too much optimism in the Silver market, but I have been saying that for quite a while. Silver buyers probably should wait for the next buy signal on the intermediate indicator, which is shown in the bottom chart.
Recommendation: Add to Gold positions on any down days this week. I would still wait on Silver till the next buy signal.
Your Eternal Optimist;
March 11, 2004
Ned W. Schmidt, CFA, CEBSThe Value View Gold Report
Ned W. Schmidt, CFA, CEBS is publisher of The Value View Gold Report. His monumental report, "$1,265 GOLD", with 255 pages and 98 graphs, has now been released. Previous editions of this work have been read by hundreds, probably saving their portfolios countless millions of losses. Ned welcomes your comments and questions. His mission in life is to rescue investors from the abyss of financial assets and the coming collapse of the U.S. dollar. He can be contacted at firstname.lastname@example.org. To get a copy of "1,265 GOLD" and to receive The Value View Gold report by e-mail each month click here.
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