Trading Thoughts
from The
Value View Gold Report
Ned W. Schmidt, CFA, CEBS
Aug 15, 2005
TRADING THOUGHTS is about what the name in implies. The
purpose of this publication 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.
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.
charts
While out and about this weekend,
thank any SUV drivers one meets. Any cars with "save the
planet" stickers should be greeted with a wave. Thanks to
all of those "energy ostriches," price of oil slowly
workings its way toward $70. Delta Airlines will apparently be
first casualty. Impact on rosy, phony employment numbers? Who
next?
The glorious picture in the
first chart is certainly one that should make the heart of any
Gold investor flutter. Friday's action pushed the price of Gold
up, out of the lateral pattern in which it had been trapped.
Yeah! Hurrah! Wow! Go for it!
That movement out of the lateral
pattern confirms that trend has returned to the positive mode.
While ending the week overbought as the shorts had their "shorts"
squeezed, some retracement is likely in the coming week. Let
Gold price settle before buying due to over bought condition.
A little consolidation is likely, and then on to new highs.
That smell in the background
is that of a Gold bull market. While the stock groupies fret
over their Dell delusion this weekend, the Gold bugs can relax
and reflect on coming profits.
Basic Trend: Silver: Up Investors should focus on Buy signals.
Strategy: Positive, Per Investment Policy of
October 2004
Investment Policy: Emphasize Buys
charts
Silver is a little behind Gold
at this moment. Note same lateral pattern exists in Silver. A
short-term buy late this past week suggests that Silver is preparing
to also move out of the lateral pattern. Given that Silver is
over sold, a move upward is possible to catch up with Gold.
The next rally should take
out $7.50, and the top of the lateral pattern. Traders will be
drawn to Silver. That will set the stage for taking out last
year's high before Labor Day. $9 Silver is still expected before
a year end.
Recommendation:
Sell
Dell stock, and buy Silver this week. Gold buyers should wait
for consolidation. Hold Gold and Silver for higher prices, and
profits!
SOME OTHER THOUGHTS:
Periodically
some graphs that we have used in either the monthly letter or
in a posted article may be of continued interest. We will run
them on this page. The comments will be brief as the graph is
the real message. Will appear when something interesting, and
time permits.
This graph
is U.S. personal savings as a percentage of disposable income,
or what is commonly called the savings rate. The latest plot
is essentially zero. U.S. consumers are not saving any of their
disposable income, essentially income after the tax collector
extracts all that is possible. By definition, savings is income
minus consumption. S = Income - Consumption. That means U.S .
consumers are spending all they get on housing, gasoline, furniture
for their new homes, etc. Across the chart is a line for the
average of the time period shown. To get back to the average
savings rate, U.S. consumption would have to fall by $250 billion,
annualized. Back before the stock market crashed, the gurus said
the savings rate did not matter because of stock market profits.
What happened? Both the stock market and the economy crashed.
Now, the gurus say do not worry because of housing profits. People
are now "saving" with their houses. They are doing
that cause the last advice was such a disaster. So, what will
happen now? A housing price collapse and a Great Recession are
just over the horizon. Reversion to the mean is not an idle concept,
but tends to be the way the economic world works.
For the latest
in economic news and evaluation, click on this link: http://www.gillespieresearch.com
Your Eternal Optimist;
Aug 13, 2005
Ned W. Schmidt
email: nwschmidt@earthlink.net
TRADING
THOUGHTS
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