-- Posted Wednesday, 5 December 2007 | Digg This Article | Source: GoldSeek.com

The business media keeps telling investors to remain faithful. Paper equities, despite their continuing under performance, are they claim the place to put your wealth. A broken clock is right twice a day, and that seems to beat the record of most of gurus appearing in the business media. We are repeatedly told that the market is just shy of a high, making a high, or consolidating gains. What is important though is not the level of market or the price of an investment. What is important is what it will buy. In the chart, using blue circles, is plotted the DJIA for this year. Yes, a gain is being recorded. However, more telling is the red line which is the DJIA adjusted for the loss of value of the dollar. It shows what the DJIA will buy in the big world. When adjusted for the loss of purchasing power by the dollar, the DJIA is no higher than at the beginning of the year. The monetary illusion of rising nominal dollars masks the loss of value in what the DJIA will buy in world markets.

Gold has clearly done far better at maintaining purchasing power. No doubt all have been excited by Gold's rise to over $800. Now, Gold is in process of a much needed correction. Such events are necessary to develop the fuel for the next rally. Investors now have important Gold questions. How far will correction go? Will it break $700? When will an over sold condition develop to entice investors to buy? When should buyers step up? With the U.S. dollar on the way out as principal global money, owning Gold is more important than ever.  The long-term case for Gold has been confirmed by the response of global financial markets to structural ineptness at the Federal Reserve. No longer are forecasts for $1,400 ridiculed. All that remains is selecting the best times to buy Gold.

 

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

-- Posted Wednesday, 5 December 2007 | Digg This Article | Source: GoldSeek.com

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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