by Ned W. Schmidt, CFA, CEBS
Schmidt Management Company
June 20, 2007
Can double digit inflation exist in the headline number and �core� inflation remain muted? Does the cost of energy and food influence the cost structure of the world? Will China suddenly quit importing oil and food, causing prices to fall? Will the real world ever become known to the statistically challenged individuals creating government estimates of inflation? Those are questions that investors need to answer. Many investors have already answered these questions, and voted with their money. The chart below is our way of awaiting what may be a shocking event for investors. The ten year return on US$Gold is slowly moving up in a way that it will soon exceed that on U.S. paper equities, as measured by the S&P 500 total return.
Decade old bear market for U.S. dollar continues. Today, CNBC noted that the S&P 500 had not set an intra day high above that set in 2000. Is there a message here? Monetary illusion evident in the value of paper equities versus the return on paper equities should not be ignored. News seems to drift in daily on asset meltdown now taking place below the surface in mortgage related investments held by speculative hedge funds(See NYT, 19 June). Which fund will be first to flame out due to speculating in exotic mortgage products? As that happens and carnage spreads, the U.S. dollar will come under increasing selling pressure. Gold will be the investment that benefits, and continue the move to more than $1,400.
© 2007 Ned W. Schmidt
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. His monumental report, "$1,265 GOLD", with 255 pages and 98 graphs, is now widely known, and is available at www.amazon.com or from the author by clicking HERE This work has now been read by investors in over twelve countries around the world. 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 by Email.
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.