FSO Editorials: Trading Thoughts by Ned Schmidt 03/06/2005

FSO Editorials

TRADING THOUGHTS
THE VALUE VIEW GOLD REPORT
Disciplined Analysis of Gold
by Ned W. Schmidt, CFA, CEBS
Schmidt Management Company
March 6, 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 metals market are favorable or not.

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.

Certainly became an interesting week. On Friday, after release of the U.S. employment numbers the markets began to do strange things. First, whatever the numbers the mouse clickers at the hedge funds were going to try to push the stock market higher. Second, the dollar dived. Gold and Silver then moved up.

The movement of U.S. stocks, largely in the Dow Jones issues as the NASDAQ has slumped, got some attention. Such action in the stock market of a fading currency is not unusual. In local currencies, the best performing stock market in the world last year was Zimbabwe. The reason for that is quite simple, the money can not be spent anywhere. People just get rid of it and the quickest thing to do with it is put it in the stock market.

With the U.S. dollar returning to its bear market trend, a similar action may be developing. Dow Jones stocks are better than holding the dollar. Investors are just getting rid of their dollars. Do not be drawn into it, get rid of your dollars by buying Gold and Silver.

The dollar's weakness had been expected. Too much buying of U.S. debt by foreign institutions the past two weeks. See page three for this.

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

Both Gold and Silver tried to correct their over bought condition. Silver did better at that than did Gold. Weakness had been expected last week, but had hoped for a little more than developed.

Friday's action was built on the slump of the dollar. Therefore, we might not see the needed weakness to create a solid over sold condition for another week or two. May be a somewhat gradual unwinding process. The buy signals have generally turned out to be successful, and importantly the next mini lows in both metals will be above the previous lows. Next week may show little action, and allow indicators to continue unwinding. On any strong weakness buying would be acceptable but better to wait for next buy signals. Whatever, higher prices are going to happen!

Recommendation: Buy on price weakness. Hold for higher prices.

Your eternal optimist,

Ned W. Schmidt, CFA, CEBS

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.

TRADING THOUGHTS is published 45 times per year and distributed by e-mail. An e-mail subscription is $225 per year. Email subscribers to THE VALUE VIEW GOLD REPORT can receive TRADING THOUGHTS as part of a $99 e-mail package subscription to THE VALUE VIEW GOLD REPORT. Fax subscriptions are available for $325 per year. TRADING THOUGHT is not available by regular mail. To receive TRADING THOUGHTS along with THE VALUE VIEW GOLD REPORT click on link below or send your check or credit card information to: Schmidt Management Company, PO Box 846, Boca Raton FL 33429. Fax orders can be sent to 215-243-7161. Our phone number to place an order is 561-447-0874. Under no circumstance will subscriptions be cancelled or refunds issued after the receipt of your first issue.

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.

Please visit Mr. Schmidt's Cover Page for other editorials.

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.