TRADING THOUGHTS
from THE VALUE VIEW GOLD REPORT
TRADING THOUGHTS is about what the name in implies, is to promote timely and profitable trading of precious metals. We do not believe every turn in the market can be called. Our goal is that our recommendations should be profitable. These goals are not the same. Profits are the goal. Trades are not the goal. DO NOT EXPECT ALL RECOMMENDATIONS TO BE PROFITABLE. No system can achieve that lofty goal. TRADING THOUGHTS is not intended to be a lengthy news letter filled with witty comments. The goal is simply to state whether conditions in the precious metal's market are favorable or not. Traders are advised that unless they have exceptional experience not to trade against the basic trend. Trades against market trend not expected to be as productive as those with trend.
Are no adults left on Wall Street? Thursday's trading provided a rate opportunity to witness massive investment idiocy. Let us quickly review. Terrorist attacks were thwarted in England. All air flights from London cancelled. Street sees fewer flights as lowering demand for jet fuel, and, therefore, oil. Oil prices are pushed down. Lower oil prices means lower jet fuel prices. Lower jet fuel price is good for airlines, so they bought airline stocks. In short, cancelled air line flights due to terrorism is good for airlines. And by the way, lower oil prices means inflation is dead so they sold Gold.
The only way this chain of thinking works is if airlines never fly again out of England. Complete and total idiocy. Do not let these small children near your money, and buy Gold on price weakness!
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.
And trading like we witnessed on Friday is further indication of the immaturity of so many fund managers. How can they let these financially speaking near morons manage money? Do they know anything about markets?
If you look at any web site chart that tracks Gold prices in real time, Gold was pushed lower by selling after about 11am New York time. At that time of the day, Dubai and London are closed. New York traders are starting to think about going home for the weekend. Some funds, managed by massive immaturity, tried to sell for whatever reason. These children think all markets are like DELL and INTC, with lots of other morons trading them. Gold, and Silver, are dealer markets. Selling into them late on Friday is nuts. That price action in Gold is setting up a Short-term Buy signal for middle of next week, possibly Wednesday. Use idiocy of fund managers to fatten your future wealth. Will advise.
Basic Trend: $Silver: Up Investors should focus on Buy signals. Strategy: Positive, Per Investment Policy of October 2004 Investment Policy: Emphasize Buys
First, in the top chart notice what is sliding off the left side of the graph. That furious activity in anticipation of the Silver ETF is slipping slowly into history. Time is an important element of the picture. Second, a new structure has clearly developed. Old market action is slowly fading in time, and new structure is arising from ashes of the past. Fund selling on Friday, likely by same morons discussed above, may create an opportunity for Silver investors. Short-term Buy signal possible late next week. Will advise.
Recommendations: Hold existing Gold and Silver positions for higher prices, and further profits! Add to positions on buy signals.
CN$Gold: Attention of the world was really focused on events in London and the Middle East. Canada was not much part of the discussion, and if one lives in Canada that is probably a good thing. Trading in the CN$ was confused, and the pattern leaves little that makes sense. A big question needs to be answered. Is Canada vulnerable to events as occurred in London? Canadians tend to feel secure in their world, far away from world messes. That might not always be the case. Canada has a history of being an open and tolerant society, which is what made England vulnerable. Short-term buy signal on CN$Gold likely this week, and adding to Gold holdings would be wise.
CN$Gold Recommendation: CN$ investors should be holding Gold. Use buy signals to add to holdings. CN$ long-term sell.
EU€Gold: Euro-based investors should now realize that the threat of radical Islamic terrorism is real. Had one single airliner gone down, the repercussions in terms of finance and commerce being interrupted would have become real rather than just a discussion item. French politicians think that arguing with U.S. will somehow again make their opinions meaningful in global politics. Reality is far different. French leadership is making the world a more dangerous place for all. Perhaps only when some French citizens die because of these activities will more reasoned leadership develop. In the mean time and despite the long term bullish case for the Euro versus the dollar, Euro investors should have meaningful Gold positions. Terrorism is not a reason to buy Gold. Terrorism is a reason to own Gold. €Gold likely to develop short-term buy signals this week, and Euro investors should use it to buy Gold. Defend your wealth against terrorism and French politicians.
EU€Gold Recommendation: EU€ investors can hold Gold for long-term. EU€ likely to appreciate against US$.
GBP £GOLD: £335.1 -7.6
The financial and commercial havoc that would have followed had the terrorists been successful is hard to imagine. Clearly, England is paying a price for being an open and tolerant society. These events, however, may be providing an opportunity. Short-term Buy on £Gold is expected on Monday. These signals always are a little tentative, as markets can change dramatically. Buy £Gold is close to price above.
GDM: 1052.18, - 24.78 or -2.2%
That 1100 level on the GDM continues to be a frustration level for investors in Gold stocks. It represents the resistance you are seeing in the individual charts. If one draws a line across that chart at 1100 you will find that it now has been important to technicians five times. When it is broken, a dramatic up move will develop. Your reward is coming.
PAPER ASSET GROUPIES:
Paper asset groupies are feeling the pain. Friday the market failed them. It did not hold that little bounce on Thursday. Their great fear at the moment is that the last little low will not hold. It will not, and they then face a test of that 1920 area. Paper asset groupies no longer have Greenspan to bail them out. Their wealth is at great risk. We should remember to have some compassion for these lost souls.
Ned W. Schmidt, CFA, CEBS
Click to email me: nwschmidt@earthlink.net
August 14, 2006
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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