U.S. trade deficit on goods and services for last month was reported as $59 billion. For another month $59+ billion of green paper was exported by the U.S. Duringsame period central banks reduced their holdings of U.S. debt by $30+ billion. Those values, when taken together, mean that around the world $90 billion of green paper was sold, or not not bought, by central banks. Little wonder U.S. dollar has rediscovereddownward path and Gold has risen. Just as business media was proclaiming Gold an unwise investment, the price rose to above US$700. Any interest rate cut in the U.S. will only add encouragement to dollar's demise, and initiate next wave in Gold Super Cycle.
Fundamentals aside,investors are fixated on 18 September when U.S. FOMC is expected to bail out collapsing mortgage brokers, bleeding investment bankers, and poorly managed hedge funds. Entire business media, all small children in Nepal, and every goat farmer around the world now expects an interest rate cut. Discussion has shifted to how big will be rate cut. Unfortunately, Greenspan is no longer in charge. Mandate of Federal Reserve does not include saving poorly chosen investments. Enthusiasm now at such a level only disappointment seems possible. We enjoy $Gold being over $700, but must acknowledge over bought condition and possibility of “selling on the news” arising fromFOMC meeting. Investors should be accumulating cash from sale of paper assets in order to take advantage of next period of price weakness in Gold which produces buying conditions.
GOLD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report, monthly, and Trading Thoughts, weekly.
For a subscription go to http://home.att.net/~nwschmidt/Order_Gold_EMonthlyTT.html
Ned will be exploring the Gold Super Cycle at The Wealth Expo in NYC, 19-21 October.
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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