Trading Thoughts
from The Value View Gold Report

Ned W. Schmidt, CFA, CEBS
Dec 26, 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 newsletter 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.

Gold

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.

Trading was interesting in the run up to the Christmas holiday. Remember as we have talked before, the markets are connected. No markets exist in isolation. All are connected by money flows influenced by relative value and internal dynamics. What happens inside one financial market influences what happens inside other financial markets. Today's widespread use of cross market trades, hedging, and electronic trading make this more so than ever before.

On Monday, the NASDAQ had a serious correction. The next day, Tuesday, was the first day of the transit strike in New York City. Sellers of the metals appeared on Tuesday, likely motivated to balance portfolios after Monday's drubbing on the NASDAQ. Too close to end of year and some traders were still likely trying to get to work. Wrong time to be selling. Both metals reacted strongly to that selling.

The short-term indicator is moving back off of over sold as year end selling seems to have been nearly concluded. A series of multiple short-term buy signals such as developed earlier this fall is expected. The intermediate indicator is moving toward an oversold, and is about to take out the previous low readings. With the last week of the year next, expect little to happen. Gold is likely to continue seeking bottom edge of the new trading pattern this week. If intermediate buy develops, will advise. A year from now, December 2006, today's Gold price will look like an after Christmas sale bargain.

Silver

Basic Trend: Silver: Up Investors should focus on Buy signals.
Strategy: Positive, Per Investment Policy of October 2004
Investment Policy: Emphasize Buys

Silver seeking to find new lower edge of the coming trading range. Buyers seem not to be deterred by the correction. Perhaps they are looking forward to the day when the Silver ETF arrives. Short-term indicator has moved off of over sold. Multiple short-tem buy signals likely. This is part of the process of developing that bottom edge of the trading range. Intermediate indicator also looking for the next signal. Really expect little action this coming week. Should intermediate indicator develop a buy signal, we will send out a note. What will be Silver's price a year from now?

$Gold & $Silver Recommendations:
Hold your existing Gold and Silver positions for higher prices, and further profits!

The Other Golds

CN$GOLD = CN$587.8   + 4.3

EU€Gold = €424.9   + 4.5

CN$Gold: Canadian $ Gold acts as if it is trying to put in a short-term bottom. Canadian dollar finished the week up just a little. However, end of the week price was down from high. Foreign investors may be put off by the political rhetoric of the Canadian election. Investors looking for improvement in Canadian government are likely to be disappointed. Intermediate indicator also moving toward over sold. Expect multiple short-term buy signals for bottom process.

CN$Gold Recommendation: CN$ investors should be holding Gold. CN$ long-term sell.

EU€Gold: Intermediate indicator in chart (above, right). A little bothered by this signal as can not come up with good defense of it. Perhaps that is what makes markets do what they do. EU investors can make purchases early in the week. Period of weakness, or rather lack of strength, developing in Euro. More likely this is a move away from the U.S. dollar weakness of recent months, rather than any meaningful development with regards the Euro.

EU€Gold Recommendation: EU€ investors can hold Gold for long-term. Should only purchase Gold on buy Signals. EU€ likely to appreciate against US$. EU€ could trade as high as US3.00+ in the years ahead.

Your Eternal Optimist,

Ned W. Schmidt
Ned W. Schmidt, CFA,CEBS is publisher of THE VALUE VIEW GOLD REPORT. That report nowincludes a weekly message, TRADING THOUGHTS, to help investorsidentify timely points for buying Gold and Silver.

You can join him for the Gold Super Cycle here.

His monumental report, "$1,265 GOLD," with 255pages and 98 graphs, is now widely known, and is available atwww.amazon.com or from the author. This work has nowbeen read by investors in over twelve countries.

Ned welcomes your comments and questions. His mission in lifeis to rescue investors from the abyss of financial assets andthe coming collapse of the U.S. dollar. He can be contacted atnwschmidt@earthlink.net.

Copyright ©2006 Ned W.Schmidt... All Rights Reserved.

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