In essence, the Federal Reserve has reallocated money from Main Street to Wall Street. This massive shift of funds to Wall Street away from producing sectors of the U.S. economy has some strong implications. The U.S. recession will be deeper and longer. Rather than allowing the system to purge itself of weak financial institutions, the Federal Reserve is providing them with special funding. Money has been shifted from goods and services producing sectors to non productive financial entities. Massive economic recession now rolling across U.S., and into Canada, was created by misguided policies at the Federal Reserve. Now, another round of misguided policies has been initiated. This latest set of actions is not a cure, but a prolonger of the disease and rot. These actions will only exacerbate the long-term Bear market for the U.S. dollar. Over time, $Gold's price will benefit from these actions. Gold is insurance against acts of the central bank. On a tactical basis, Gold has passed into a correction. Investors should use any serious price weakness which is likely to develop to add to Gold holdings in a measured manner. Also, be wary of oil trading lemmings, their next act may push Gold lower and deeper than many consider possible.

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, go to http://home.att.net/~nwschmidt/Order_Gold_EMonthlyTT.html

-- Posted Wednesday, 23 April 2008 | Digg This Article