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.

Indicators are designed in many ways to achieve different goals. Some 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 2001. 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.

A few months ago the Long-Term Momentum Model turned negative. At that time the interpretation was that the consolidation in which Gold had been would continue. Since US$ Gold continued to be undervalued that seemed all the change in view that was necessary. That measure has now turned positive, and the monthly average is moving to a new high. This set of conditions is viewed as extremely favorable. US$ Gold appears poised to begin the next leg of the Gold Super Cycle.

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$ Gold seems to be in that position. Investors should become buyers of Gold 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.

Silver investors be advised that the Long-Term Momentum Model on Silver is also improving. A positive reading is expected soon on that measure. Owners of Silver should become much happier as time passes.

Your Eternal Optimist,