Why they're called "Precious" metals.

This was sent to our basic subscribers on 04/03/06.
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A new quarter has begun and we'd like to just review our positions from the first quarter to see where we've been and where we might be heading. Please don't misconstrue what I just said. We don't attempt to predict anything when it comes to the markets. We follow trends and we manage the risk on the individual trades. We have been blessed with a secular bull market in the commodities markets for over 4 years now. If you have been a participant, congratulations! You should be very wealthy by now. If not, I will try, through this service, to help you get your share of the profits that are yet to come as the commodities bull market is showing no signs of decay.

Precious Metals - Anyone that follows my comments in the financial journals knows that I have been bullish and, of course, LONG the Precious metals for quite some time. All you have to do is go back to August of last year and I was still begging traders to get LONG the market. I am THE "raging bull" when it comes to the Precious metals complex. (See article at http://www.resourceinvestor.com/pebble.asp?relid=11873) So where do I stand today? Well, nothing has changed because the trend remains up. Now, I know what some of you are saying. "Dale, the market has come a long way and I'm just not comfortable buying at these lofty levels." Well, my friends, one of the tenets of trend following is the "Buy high and Sell higher". Could the trend in Gold and Silver end today? Absolutely! That's where the "Manage the Risk" part of the trade applies. No one knows when trends will end but don't sell this bull market short. I believe that Gold will rally to $1,000 and beyond. Remember, that's just one man's opinion. To recap, APR GOLD closed at 523.40 on December 30, 2005. The closing price on March 31, 2006 was 581.80. I'll do the math for you. That's an 11%+ gain for the quarter. But, of course, due to the leverage that can be applied in the futures markets, our actual return was simply phenomenal. MAY Silver? It closes at $8.96 on 12/30/05 and the closing price on Friday was $11.52. That's a quarterly gain of 28.6%! Let me throw in one caveat while you wipe the drool off your face. I like Gold much better than I do Silver right now due to one thing - the new SILVER ETF that should come to market soon. This new trading vehicle has created an artificial demand for Silver and, once the IPO comes to markets, I won't be surprised to see a setback in Silver. But this setback would probably be nothing more than an opportunity to enter the market for further gains.

Here's a link to a very interesting chart on Gold courtesy of The Privateer.

http://www.the-privateer.com/chart/gold-pf.html

More later.

Dale F. Doelling
Chief Market Technician
Trends In Commodities