-- Posted Wednesday, 27 February 2008 | Digg This Article | Source: GoldSeek.com
This wonderful rally in Gold, largely driven by money chasing momentum, is generating a great deal of bravado. Coming sale of a significant amount of Gold by the IMF is scoffed at. Why all of a sudden did the G-7 agree to it? Is more to come? At the same time, the US$ is feeling the wrath ofmomentum money as its value is trashed. “More Money” Misken at the Federal Reserve thinks only of benefits from lower U.S. interest rates, while ignoring the damage. Will the Federal Reserve continue to ignore the value of dollar and the inflationary impact of oil and food prices trickling through the economy? At some level for the U.S. dollar and inflation, the Federal Reserve may be forced to acknowledge its manifest errors. Dollar sellers are “spitting” in the eyes of world's monetary authorities. Be wary of cornered animals. Traders may be pushing Gold and Silver to unsustainable short-term levels.
The Gold stocks, represented by the GDM, in this week's chart have not joined fully in the party. That index is barely above the October level, and down from its most recent high. The reluctance of Gold stock investors to buy during this Gold rally should not be ignored. They tend to be value investors, and their gray hair is experience not a fashion statement. The difference between the performance of $Gold and the Gold stocks is a measure of the speculative exuberance now running through the Gold market. Fund mangers, being desperate for performance, are chasing Gold and Silver as all of their other ideas continue to perform miserably. The $900 level is rapidly becoming critical support. A breach of that level is likely to give Gold investors again an opportunity to buy. When the funds decide to depart, and they will, they may leave some damage behind.
GOLD THOUGHTS come from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report, monthly, and Trading Thoughts, weekly. To receive copies of recent reports, send an email to valueviewgoldreport@earhlink.netBut note, we do not respond to email spam prevention programs.
-- Posted Wednesday, 27 February 2008 | 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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