-- Posted Monday, 23 October 2006 | Digg This Article
TRADING THOUGHTS is about what the name in implies, 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.
Heard yesterday on the news that President Bush met the Generals in charge of the Iraq operation. Hey, that sounds like an idea. Maybe they should have met each other last year. Something to be said for a President that preferred to fool around with other women rather than nation building. For one, sex scandals are a lot cheaper.
Somehow we have to bring together a number of thoughts into one investment view. North Korea is not going to willingly give up its nukes, and no one can take them away from them without causing some kind of annoying disturbance. FOMC meets next week on U.S. interest rates. This event is one of those where what they do is not as important as what they say. In 17 days the U.S. election occurs. Never in history has one party been so committed to repeatedly shooting itself in the foot. Those related but separate events will likely influence all investment values.
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.
The mini rally in the value of the U.S. dollar appears to have just about run its course. All the money in and around Korea that is afraid of the North Korean nukes has probably been moved. The funds are having too much fun with stocks to play with the dollar.
$Gold got short-term over bought last week. $600 level caused the buyers to back off. We now have two attempts at $600 which helps to define the lateral pattern. Some weakness, barring some unknown event, likely next week till after the FOMC meeting. That action should help further define the lower edge of the lateral pattern. With that done and the election on horizon, $Gold should be ready to move decidedly above $600.
FOMC meeting will be another positive for $Gold fundamentals. Committee will reconfirm its desire to avoid raising rates. How the markets react to their statement is hard to guess at this time given erratic thinking of small children managing hedge funds.
Basic Trend: $Silver: Up Investors should focus on Buy signals. Strategy: Positive, Per Investment Policy of October 2004 Investment Policy: Emphasize Buys
Silver building nice upward channel, easily identifiable by most traders. Short-term over bought so likely to trade down to lower edge of channel. That action should set stage for move to $12.50. Another small decline then will put 
Silver in position to take out $13. That $13 level is the one on which all attention focused. Silver should move through that level well before Thanksgiving which should allow enough time for a new cycle high before year end.
Recommendations: Hold existing Gold and Silver positions for higher prices, and further profits! Add to positions on buy signals.
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GOLD'S PRICE: Dominant component of Gold price will be the "real"price. When the global monetary hegemon, the U.S., is demonstrating so many ragged edges, the "real" price of Gold should move up. Individual exchange rates may be a factor, but not the dominant force for Gold's price.
CN$Gold: CN$667.2 - 2.9
CN$Gold moved up above the previous high in the middle of the week. Short-term over bought at this time. Might be weak this week, but that should set the stage for another high in the pattern that is forming.
Recommendation: Use strength in CN$ and buy signals to add to holdings. CN$ long-term sell.
EU€Gold: 469.80 - 1.2
€Gold price continues to be an important barometer for Gold's "real" price trend. The Euro's fundamentals are stronger than U.S. dollar. For that reason, €Gold moving decidedly above €475 would be bullish indicator.
EU€Gold Recommendation: EU€ investors can hold Gold for long-term. EU€ likely to appreciate against US$.
GBP £GOLD: £314.7 - 2.6
GBP Gold has now spent several weeks moving sideways. This pattern is similar to others. Over bought so should trade down and then challenge the 335 level.
Recommendation: GB£ now in long -term bear market. Add to Gold positions.
THE VALUE VIEW GOLD REPORT is published monthly, about the 19th.
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GDM: 969.65, + 0.54 or + 0.0%
Simple view on GDM, and Gold stocks. That sideways pattern is suggesting another slight dip before moving higher. GDM getting through 1000 level would suggest that stocks are being accumulated in anticipation of moving higher.
For those that would like exposure to the stocks, but don't have a conviction on which ones to buy consider GDX. The GDX is a Gold stock ETF that trades on the Amex, and owns the stocks that comprise the GDM.
PAPER ASSET GROUPIES:
Paper asset markets, though primarily the NYSE, are now well into over bought. Speculative fervor running high. Marketwatch.com reports only two new lows on the NYSE on Friday. Paper asset markets should be moving decidedly lower within a three-week time frame.
OIL & GAS: Just as CNBC and its gurus declared that natural gas was on its way to zero, the price turned up.
U.S. ELECTION:
Election is being ignored by the markets. Could be interesting. Results should benefit price of $Gold.
Your Eternal Optimist;
Ned W. Schmidt,CFA,CEBS
Click to email me: nwschmidt@earthlink.net
THE VALUE VIEW GOLD REPORT is published monthly, and
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-- Posted Monday, 23 October 2006 | Digg This Article
