THE VALUE VIEW GOLD REPORT
Disciplined Analysis of Gold
by Ned W. Schmidt, CFA, CEBS
Schmidt Management Company
December 20, 2004
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 metals market are favorable or not.
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.
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.
E-mail addresses do not tell much about location, so where you live is unknown. Here in St. Louis, to visit Oldest Daughter, cold is the rule. Cold being the absence of heat, like government is the absence of common sense.
Paper stocks again demonstrated their dubious value. Pfizer wiped out, according to bobble heads on CNBC, about 30 billion dollars of market value on Friday. Some of those stock holders probably wish they owned Gold instead.
Fiction writers were fully employed last week. Government economists reported that inflation remained near dormant at 0.2% in the last month. Would you take a check from a government statistician?
Gold bounced off the short-term over sold condition that had developed a week ago. The intermediate indicator is one given our most attention. Best guess would be that Gold will move back down slightly in the coming week. That action would allow the intermediate indicator to complete the move to over sold, setting up an excellent buying situation.
Forecasts for 2005 seem all over the media. Gold should certainly see $550 sometime in 2005. Gold under $400 is not likely to be seen again.
Trend: Silver: Up Investors should focus on Buy signals.
Strategy: Positive, Per Investment Policy of October 2004
Investment Policy: Emphasize Buys
The Federal Reserve has adopted a policy of Intentional Neglect toward the dollar. Their statements seem void of reality that U.S. is part of a global economic system. That situation means the dollar's depreciation will have to move to a crisis state before any meaningful action will be taken.
Such an attitude toward dollar means prospects for $1,300 Gold increase with each FOMC meeting. Gold is like the Dow Jones Industrial Average. Silver is like the NASDAQ, kind of a "high beta Gold." That means is Silver is going to be extremely reward to those owning it. Very slowly I am moving toward the position of Franklin Sanders.
Intermediate indicator on Silver giving a Buy signal on Monday. Silver buyers may add to positions.
Recommendation: Corrections well along. Use Buy signals to add to holdings. Hold for higher prices.
Your eternal optimist,
Ned W. Schmidt, CFA, CEBS
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Please remember that no method is perfect nor is the one
running the model.
All estimated returns are for the model portfolio and do not reflect those earned on actual portfolios.
NOTICE: This article may NOT be reproduced without the expressed, written permission of the author, Ned W. Schmidt and Financial Sense. Selective quotations are permissible as long as the author, Ned W. Schmidt, and this web site www.financialsense.com are acknowledged.