Gold Thoughts 8.27.08
Ned Schmidt, August 27th, 2008
Gold Thoughts 8.27.08
By: Ned W. Schmidt, CFA CEBS
Delusional seems to be mental state of investment community as September approaches. Nonsensical talk of the U.S. dollar having put in place a secular, or long-term, bottom is widespread. That EU economic growth rate might slow somewhat is interesting, but may be no more than statistical noise. That growth rate of Chinese economy might slow from “11+%” to “9%” is interesting, but is hardly a “dramatic” slowing. Western economies would love to achieve that level of growth over two years. This week's chart shows U.S. economy collapsing into recession. As largely a measure of momentum of a number of real economic activities, it is not distorted by questionable inflation measures. With the U.S. financial system near dysfunctional, a further slide into recession is the only reasonable expectation.
Momentum chasing traders are pushing the U.S. dollar to another long-term top. With Putin, The Terrible flexing his military might, Pakistan moving slowly toward a hard line government in control of nuclear weapons, and Israel facing a “Window of Necessity” on Iran after the November U.S. election, many reasons exist to own Gold. Some investors around the world are no doubt looking at this situation and are moving funds out of local institutions into dollar deposits. However, to look at the abysmal fundamentals of the U.S. economy and then to prognosticate a longer term bullish outlook for the U.S. dollar is pure fantasy. $Gold has put in place the 2008 bottom on the current dollar fantasy. Investors, now, need to turn their thinking to potential for a new high in the future. Given all the factors, adding to your Gold holdings at current bargain prices is imperative. Remember, many of the dollar bulls of today were FNM & FRE bulls of yesterday.
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
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.
