THE VALUE
VIEW GOLD REPORT
Investment
Policy Thoughts
Ned W. Schmidt, CFA, CEBS
November 2, 2004
INVESTMENT
POLICY THOUGHTS
is intended to advise our readers of material changes in our
thinking between the monthly issues of THE VALUE VIEW GOLD
REPORT and our weekly notes, TRADING THOUGHTS. An
investment policy is designed to be the structural framework
for an investor. Remember that, 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 news letter filled with witty comments.
The goal is simply to state whether conditions in the precious
metal's market are favorable or not. Those that might consider
themselves traders are advised that unless they have exceptional
experience not to trade against the basic trend. Those trades
against the market trend will not be expected to be as productive
as those with the trend.
Gold = US$425
.....Silver = US$7.16..... 29 October 2004
Recently we announced that
the Long-Term Momentum Model for Gold had turned positive. We
are happy to announce that the Long-Term Momentum Model for Silver
has returned to a positive reading. That action suggests that
Silver is likely moving out of the correction in which it has
been for some time. Further, that both markets are now with positive
readings is confirmation of the renewal in the bull market for
precious metals. The Gold Super Cycle continues!
When the change in the reading
for Gold occurred, we explained about this measure. Indicators
are designed to achieve different goals. Some popular ones are
constructed in ways to give short-term traders timely entry into
and exit from markets. Other measures are designed to suggest
the overall attractiveness of a market. The Long-Term Momentum
Model is designed for two purposes. First, it does not give many
signals as it tries to identify trends of longer duration. As
shown in the chart, last positive signal was in 2003 when Silver
was breaking out of the long lateral trading pattern in which
had been trapped. Second, this measure lags and serves kind of
like a slap in the face. The measure says, "Wake up, the
trend has changed. Have you?" Every signal this indicator
gives is not perfect timing. However, in use across markets it
has a far superior record to that of the guesses of most humans.
Now despite this note of optimism,
do not buy without some consideration of the level of enthusiasm
in the day's trading. When lots of excitement is obvious, back
off. Wait for a day when the funds are not buying. Do not buy
on days with news that pushes Gold and Silver up dramatically.
In other words, the rule is buy low and smart when the market
is over sold.
Momentum is one dimension of
our Investment Policy Matrix, and can be found across the top.
The other dimension is relative value, and that is shown in the
left-hand column. Our goal is to find a market that is under
valued and the long-term momentum is positive. US$ Silver seems
to be in that position. Investors should become buyers of Silver
on price weakness. Please, do not buy at the high for a day.
That does not help. Tactical trading techniques can help you
identify prices at which to buy.
Your Eternal Optimist;
Ned W. Schmidt
 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.
You can
join him for the Gold Super Cycle here.
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.
This work has now been read by investors in over twelve countries.
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 at
nwschmidt@earthlink.net.
Copyright ©2004 Ned W.
Schmidt. All Rights Reserved.
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321gold Inc
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