GOLD THOUGHTS
by Ned W. Schmidt, CFA, CEBS
Schmidt Management Company
September 12, 2007

U.S. trade deficit on goods and services for last month was reported as $59 billion. For another month $59+ billion of green paper was exported by the U.S. During  same period central banks reduced their holdings of U.S. debt by $30+ billion. Those values, when taken together, mean that around the world $90 billion of green paper was sold, or not not bought, by central banks. Little wonder U.S. dollar has rediscovered  downward path and Gold has risen. Just as business media was proclaiming Gold an unwise investment, the price rose to above US$700. Any interest rate cut in the U.S. will only add encouragement to dollar's demise, and initiate next wave in Gold Super Cycle. 

Fundamentals aside,  investors are fixated on 18 September when U.S. FOMC is expected to bail out collapsing mortgage brokers, bleeding investment bankers, and poorly managed hedge funds. Entire business media, all small children in Nepal, and every goat farmer around the world now expect an interest rate cut. Discussion has shifted to how big will be rate cut. Unfortunately, Greenspan is no longer in charge. Mandate of Federal Reserve does not include saving poorly chosen investments. Enthusiasm now at such a level only disappointment seems possible. We enjoy $Gold being over $700, but must acknowledge over bought condition and possibility of “selling on the news” arising from   FOMC meeting. Investors should be accumulating cash from sale of paper assets in order to take advantage of next period of price weakness in Gold which produces buying conditions. 

© 2007 Ned W. Schmidt
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Ned W. Schmidt,CFA,CEBS is publisher of THE VALUE VIEW GOLD REPORT. That report now includes a weekly message, TRADING THOUGHTS, to help investors identify timely points for buying Gold and Silver. His monumental report, "$1,265 GOLD", with 255 pages and 98 graphs, is now widely known, and is available at www.amazon.com or from the author by clicking HERE This work has now been read by investors in over twelve countries around the world. Ned welcomes your comments and questions. His mission in life is to rescue investors from the abyss of financial assets and the coming collapse of the U.S. dollar. He can be contacted by Email.