-- Posted Monday, 8 September 2008 | Digg This Article | Source: GoldSeek.com

Gold Bugs, this week around the world, will be joining together to celebrate the greatest financial collapse in history, past or future. In bureaucrat-speak, a conservatorship for FNM & FRE is being created. However, Gold Bugs know a duck when they see one. Part of that celebration will be our heartfelt thanks for those at Federal Reserve. In this week's chart we recount the glory of that institution. While FNM & FRE may be financially insolvent, the Federal Reserve is intellectually insolvent. Would FNM and FRE have failed if the Federal Reserve had acted properly in the past two decades, or past 105 years? Creating the Federal Reserve was meant to reduce economic instability, rather than foster it.

Financial markets may initially applaud the action by the U.S. Treasury. Any financial meltdown as a consequence of FNM & FRE has been transferred to a future date. The financial losses hidden in those two entities have not disappeared. The losses have just been temporarily put out of sight, to rise at a later date. Given character of today's financial markets, a party may be in order with the threat not imminent. For you see, the losses have been transferred from the bond holders to tomorrow's U.S. taxpayers! The Bank of China should send a thank you note to all U.S. taxpayers for their generous support. Should financial markets celebrate this transaction, Gold Bugs will likely have last great buying opportunity of a life time! While FNM & FRE are being reorganized, the real culprit escapes. Unless the Federal Reserve is also reorganized, the source of financial diseases will still lurk in the system.

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 Monday, 8 September 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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