TRADING THOUGHTS
from THE VALUE VIEW GOLD REPORT
Ned W. Schmidt,CFA,CEBS
Basic Trend: Gold:
Up Investors should focus on Buy signals. Strategy: Positive, per Investment Policy of Oct 2004. Investment Policy: Looking for buy signals, and holding long-term core position.
Some strength in the U.S. dollar was expected. A new year after a currency has been exceptionally strong or weak usually results in a sharp reversal. Not expected was that so many players would join in to buy dollar. For example, central banks alone bought $8 billion of U.S. debt last week. That annualizes to about a $400+, which is fairly strong support. Difference between intervention and manipulation is in the eye of the beholder. Clearly some momentum funds also decided to play. Action in Gold in most of last week was exacerbated by this combination.
The new year, however, brought no change in the fundamental situation for the dollar. Traders and central bankers can act, but the outflow of dollars still dominate. Fundamental flaws in the U.S. economy will not turn the dollar back to a strong money. Friday's employment report confirms that. 2.2 million jobs created last year. Of that, 76,000 were in jobs making something. The rest are paper shufflers, internet surfers and in the housing bubble. Such is not an economy that supports a global reserve currency. U.S. dollar's bear market has not ended, just paused.
Intermediate indicator will give a US$Gold Buy signal on Monday. That signal suggests that the correction for Gold has started to reach an extreme. U.S. dollar investors should buy Gold this week. Other currencies are not giving as strong an indication. We will start trying to give specific recommendations more often for other currencies.
Basic Trend: Silver:
Up Investors should focus on Buy signals. Strategy: Positive, Per Investment Policy of October 2004 Investment Policy: Emphasize Buys
Silver ignored dollar developments, holding up much better. That action helps to suggest that Gold's correction is close to an end. Intermediate indicator on Silver should give a Buy signal on Tuesday or Wednesday. Will advise.
By end of 2005 the U.S. economy will begin a massive recession and the dollar will continue in a Bear market. Gold is the only offensive play in such an environment. Gold, and Euro, are at present only long-term stores of value.
Recommendation:
Buy signals beginning to dominate. Use Buy signals to add to holdings. Hold for higher prices.
Your Eternal Optimist;
Ned W. Schmidt, CFA,CEBS
Click to email me: nwschmidt@earthlink.net
January 11, 2005
Ned W. Schmidt,CFA,CEBS is publisher of THE VALUE VIEW GOLD REPORT. That report now
includes a weekly message, TRADING THOUGHTS, to help investors identify timely points for buying
Gold and Silver. You can join him for the Gold Super Cycle at
http://home.att.net/~nwschmidt/Order_Gold_EMonthlyTT.html His monumental report, "$1,265
GOLD", which has now been read in 12 countries, has 255 pages and 98 graphs, is available at
www.amazon.com or from the author. 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 nwschmidt@earthlink.net.
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