-- Posted Wednesday, 7 May 2008 | Digg This Article | Source: GoldSeek.com

The wheat price has broken. Rice price has a short-term top. Corn may be topping out. Gold is down. Silver has taken a dive. Housing prices are in the middle of decade long bear market.  Yet, oil futures continue to move higher, fueled by margin led speculation. All of that oil action is happening when no shortages of petroleum seem to exist anywhere. Oil price is rising due to 93+% financing of the purchase price of a futures contract. With that level of margin requirements, one has to wonder if the NYMEX is acting responsibly. We need to ponder how low Gold  might slide when paper oil does finally start liquidation. Gold certainly has neither confirmed the recent oil price, nor the possible negative ramifications of persistent $121+ oil. Does Gold know something the paper oil speculators do not?

$Gold continues to digest the juices that pushed it to more than $1,000. A second period of deeply over sold conditions developed last week. That was expected as a correction is composed of several such events. Corrections are a series of sharp rallies from deeply over sold, followed by further corrective action. That chain continues till the final bottom is found. We never know the final bottom on a correction till well after the fact. For that reason, investors should be adding to portfolios during those periods of an extreme emotional absence of buyers.

Market participants have convinced themselves that the U.S. dollar's bear market should pause. That pause, while they trade paper oil, has contributed to Gold's correction. But a nation's money is really no more than a claim on the net assets, or equity, of a country. As past and present policy errors at the Federal Reserve continue to push the value of the U.S.'s equity ever lower, the dollar's bear market will renew. $1,500+ Gold is not a dream, but rather it seems a policy goal of the Federal Reserve.

GOLD THOUGHTS come from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report, monthly, and Trading Thoughts, weekly. To receive these reports, go to http://home.att.net/~nwschmidt/Order_Gold_EMonthlyTT.html

-- Posted Wednesday, 7 May 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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