This week started on a positive note with gold and silver trading higher, which again was

led by a weak dollar. I know I may sound like a broken record here, but the dollar is the

largest factor affecting the metals right now. There wasn't much in the way of news for

Monday which led to a sideways choppy day for gold and silver. Tuesday was the major

day. We hit fresh new highs in gold; these were ull time higlts,led by a very weak dollar,

but more importantly the rumor of secret meetings between Gulf States, China, Russia

and Brazil to establish non-dollar denominated oil contracts. Now, whether these

meetings are true or not it really shows the distaste that investors have with the US dollar.

Gold

Gold reached a high of $1043.50 where silver (which we think is undervalued right now

as gold hits its highs) hit $ I 7 .41 . I am very bearish the US dollar, not a big bad bear that

says we are in for hyperinflation, but more of the yogi bear type who thinks that we are

headed for a relatively orderly, steady decline in the value of the US dollar. I hope you

have caught the theme of why gold is rallying to new highs! The buying continued

during the middle of the week as again we hit fresh new highs of $1048.50 on the back of

earnings expectations and Euro dollar rally. Gold continued its upward momentum on

Thursday as the metal hit another new high of $ I 061 . The Euro dollar strength and the

US dollar weakness continues to be the talk of the town, big bad Ben Bernanke stated

Thursday night that the US central bank will be ready to tighten monetary policy as

economic conditions improve. It's great that he still has a job, but tell that to the nearly

l5% of people who are unemployed that economic conditions are improving. Until the

weekly jobless claims numbers drop into the 400k range the US economy is likely to

continue losing jobs which will keep big bad Ben and the Fed stationary for the

foreseeable future.

Silver

Silver continues to lag gold, when gold had reached its highs in 2008 of $1032 silver was

trading at $21 . With gold at highs of $ 1061 , investors may now turn to silver, which now

looks due for a rally, The gold silver ratio slipped to its lowest ratio in ayear to 59 units

per ounce of gold. In a reporl that India (The world's top consumer of metal), is now

looking to offer silver bars for sale in some cities because of interest from investors, the

metal seems to be poised to rally. Silver made a high of $17.93 before it backed off to

$17.50. Silver should continue its gains as with gold, it continues to make higher lows.

As we dip expect buyers to step in, as now we are all looking for an entry point to catch

that next run up. Look for support at $17.50 and resistance at $18.40.

The platinum group metals are rising orderly, but seem to be avoiding the major hype

we've seen in gold and silver. With poor auto sales continuing don't expect platinum or

palladium to gain any momentum soon.

Now that gold has taken out our long term target of $1032, you may sit back and ask

yourself what next? I am glad you asked!

In April 2009, gold hit a low of $865 (twice) from that low it rallied to $990. A $125

move! It has never got back to $865. After the move to $990 we had a pull back to $905.

We moved from $905 to $1025, a move of $120. With that move gold pulled back to

$985. I hope you see the pattern here. 1 think a low of $985 plus a measured move of

$ I 20 takes us to $ I I 00. We expect see this by the end of the year. As you can see we are

making higher lows ($865, $905, $985), coupled with higher highs, keeps the pressure to

the topside. With gold making a move to $ I 100 I expect silver to be well into the $20$

22 range. Keep in mind with these measured moves we will almost certainly have

pullbacks where the market is in profit taking mode.

Support levels come in at $1032, $1024, $1009.