-- Posted Sunday, 6 February 2005 | Digg This Article
Gold = US$424.00 -11.20 Silver = US$6.61 -0.16 Vol. 2005-06/61 5 FEB 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.
“Group think” took over this week in the “hedge” fund industry. That group now has about $1 trillion under control and dominates trading in almost every market. Thought process within them is as close to mob action as develops, even more so than during the internet bubble.
First, they decided that the G-7, meeting this weekend, would call for the IMF to sell $100 billion of Gold and give the money to developing nations. This plan is the brainchild of the UK government. Note that no nation has a worse record when it comes to Gold. UK was selling all the way to the bottom. Anyway, that goofy idea appears to be going nowhere. But was enough to get some selling going in Gold.
Second, the U.S. labor report was so bad relative to the popular guesses on Wall Street that they decided the Federal Reserve will abandon plans to raise rates. That thinking sent the NASDAQ up almost 30 points on Friday, and pushed the yield on 10 year U.S. notes down to 4.09%.
All that combined with widespread watching of these now popular trend lines. Every trader in every country has those drawn on their charts. One of the rules of the ages in charting is that ALL popular resistance and support lines are taken out with a vengeance. That rule will apply to this line, and it will soon act as a BUY signal when it is violated. And it will be violated.
Basic Trend: Silver: Up Investors should focus on Buy signals. Strategy: Positive, Per Investment Policy of October 2004 Investment Policy: Emphasize Buys
Silver continues building lateral trading pattern. Focus should be on top of the lateral pattern, $7. When Silver rises through that level a violent up move will develop. The same rule about popular support and resistance applies here, and is particularly true on lateral patterns.
When Silver comes out of lateral pattern, $8 will be quickly achieved. Silver investors should not wait for the break out, but rather have their positions now.
Recommendation: Powerful patterns developing that will lead to extremely strong up moves. Add to holdings this coming week on price weakness. Hold for higher prices.
Your Eternal Optimist;
Ned W. Schmidt, CFA,CEBS
Click to email me: nwschmidt@earthlink.net
TRADING THOUGHTS is published 45 times per year, and distributed by e-mail. Email subscribers to THE VALUE VIEW GOLD REPORT 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.
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-- Posted Sunday, 6 February 2005 | Digg This Article
