Trading Thoughts
from The Value View Gold Report

Ned W. Schmidt, CFA, CEBS
Mar 20, 2006

TRADING THOUGHTS is about what the name in implies. The purpose of this publication is to promote timely and profitable trading of precious metals. We do not believe every turn in the market can be called. Our goal is that our recommendations should be profitable. These goals are not the same. Profits are the goal. Trades are not the goal. DO NOT EXPECT ALL RECOMMENDATIONS TO BE PROFITABLE. No system can achieve that lofty goal. TRADING THOUGHTS is not intended to be a lengthy newsletter filled with witty comments. The goal is simply to state whether conditions in the precious metal's market are favorable or not. Traders are advised that unless they have exceptional experience not to trade against the basic trend. Trades against market trend not expected to be as productive as those with trend.

In sum, it was a fairly boring week. The news and events were not those that stirred much reaction. The government put out another set of phony inflation numbers. One example of that was in my recent cable bill. The government statisticians make a vast number of quality adjustments that make prices look like they are going down. Much has been written about that, so we need not reiterate the problem here. My cable company deleted some programing from my package, but did not lower the bill. That is a price increase. All such adjustments are ignored by the government statisticians, while at the same time assuming that I buy a computer and flat screen television every month at lower quality adjusted prices. Such manipulations with the intent to mislead usually come back to roost. The inflation numbers appear to be moving into a period where the adjustments will not be so favorable. Liars always get caught up in their lies.

Gold

Basic Trend: $Gold Up. Investors should focus on Buy signals.
Strategy: Positive, per Investment Policy of Oct 2004.
Investment Policy: Looking for buy signals, and holding long-term core position.

Some good news appears to be developing in the picture on Gold. Concern had been that the correction would have more depth, and be somewhat painful. Now, the correction appears to be of rolling nature, or a "walking" correction. That type of correction is far less painful.

What we are seeing is the buyers step in each time Gold gets oversold in the short-term. At the same time the intermediate indicator is moving slowly toward an over sold condition. Perhaps about three weeks, or so, may be necessary to complete the process. Prices below $545 are attractive.

Silver

Basic Trend: $Silver: Up Investors should focus on Buy signals.
Strategy: Positive, Per Investment Policy of October 2004
Investment Policy: Emphasize Buys

Silver is over done, and due for a serious correction. The price of Silver has been near straight up for six months, without a serious intermediate correction. A lot of this move has been driven by the talk of the Silver ETF, which conceivably would exacerbate the supply situation.

Caution is more than appropriate in the Silver market. A correction to below $9 is likely, and that correction could last till the end of the year. Counting your profits at this level is nice, but buying may not be appropriate.

Recommendations: Hold existing Gold and Silver positions for higher prices, and further profits! A positive announcement on Silver ETF could send Silver dramatically higher and that possibility is not included in above comments.

The Other Golds

CN$GOLD = CN$641.7   + 24.5

EU€Gold = €454.5   + 1.4

CN$Gold: CN $ certainly had a nice bounce up this past week. CN$ essentially down all week, and especially weak versus the Euro. CN $Gold going through a series of short-term over sold and over bought cycles. This process is that rolling or walking correction talked about earlier. May take some time, but CN $Gold setting up for another move upward. That three-week horizon again appears possible for the end of the process, and then up to a new high.

CN$Gold Recommendation: CN$ investors should be holding Gold. Accumulate cash for next buy signal. CN$ long-term sell.

EU€Gold: EU€ Gold also going through this rolling correction process. An intermediate buy signal could occur this week. The following week is more likely. Then, do we get a new high in €Gold? All traders will be watching for that. Should it develop it will draw traders to the Gold market, and may serve as the catalyst for a Silver correction.

EU€Gold Recommendation: EU€ investors can hold Gold for long-term. EU€likely to appreciate against US$.

The corrective process is readily observed in the GDM. A series of short-term over sold conditions have developed. At the some time the intermediate indicator is moving very slowly toward over sold. That will set the stage for the end of the correction in the Gold stocks. A final bottom is likely in next two weeks in the stocks. New high in them to come? Yes.

We need to wrap up and go work on the monthly letter. It should be out on Monday afternoon. Some new data on the collapsing housing market and the foreign earnings of the United States. Strong fundamental case for Gold remains. Now, as you can gather from this weekend's writings, the technical picture is shaping up. New highs for Gold definitely scheduled for the rest of 2006.

Your Eternal Optimist,

March 18, 2006
Ned W. Schmidt
Ned W. Schmidt, CFA,CEBS is publisher of THE VALUE VIEW GOLD REPORT. That report nowincludes a weekly message, TRADING THOUGHTS, to help investorsidentify timely points for buying Gold and Silver.

You can join him for the Gold Super Cycle here.

His monumental report, "$1,265 GOLD," with 255pages and 98 graphs, is now widely known, and is available atwww.amazon.com or from the author. This work has nowbeen read by investors in over twelve countries.

Ned welcomes your comments and questions. His mission in lifeis to rescue investors from the abyss of financial assets andthe coming collapse of the U.S. dollar. He can be contacted atnwschmidt@earthlink.net.

Copyright ©2006 Ned W.Schmidt... All Rights Reserved.

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