The question seems to have changed. No longer does the question deal with whether or not U.S. housing market has bottomed. It has not. Now the question is far different. The depth of the U.S. mortgage market collapse is the question. How big will be losses? Which hedge fund will be next to burst into flames? In Germany, U.S. mortgage market collapse is likely to force a near complete structuring of banking industry. In the U.S., pink slips seem to be the primary output of housing and mortgage markets. The giant liquidity abyss created by this financial fantasy, and values were indeed a fantasy, is forcing central banks to sell U.S. government and agency debt. In the past three weeks, they sold more than $24 billion. U.S. dollar has massive overhead supply that will depress it for years.
Chart is of past 100 days of U.S.$Gold price. Lot of gnashing of teeth about fund selling. That was yesterday's action. We need to focus on tomorrow. Chart is not of a price that wants to go down. Each time selling developed, buyers stepped in. Seems like best time to buy is before noon New York time, when deluded in that city are selling. June bottom was likely capitulation on part of funds. From there developed small set of five waves up. $Gold has now completed three wave correction, and is ready to move higher. With much of panic fund selling complete, $Gold can move higher. Funds foolish enough to be short $Gold should start feeling nervous. As $Gold moves closer to $690, sellers will be forced to become buyers. At $690 panic buying will erupt. A dramatic up move may be about to unfold. Gold definitely showed safe haven status Tuesday, off a few dollars as equity markets collapsed.
GOLD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report, monthly, and Trading Thoughts, weekly.
Ned W. Schmidt, CFA CEBS is publisher of THE VALUE VIEW GOLD REPORT - Coverage of the emerging GOLD SUPER CYCLE. Explores the situation in Gold that may carry it to $1,225. To subscribe Click Here. A trial period is available by Clicking Here
Ned W. Schmidt, CFA CEBS is a nationally recognized authority and speaker on a variety of investment topics, including value investing and global capital flows. Currently, Ned is Resident of Schmidt Management Company in DeLand, Florida, specializing in financial engineering. The firm’s proprietary research influences about $15 billion in assets, and is investment advisor to the Argyle Global Equity Appreciation Fund.
Most recently Ned served as the Visiting George Professor of Applied at Stetson University where he taught institutional money management. Preciously he had been a Senior Vice president with a trust company where he had the responsibility for discretionary investments of $3.5 billion.
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