PRECIOUS METALS REVIEW - 12/01/06

A slowing U.S. economy . . . increasing inflation . . . a falling U.S.
Dollar . . . and rising gold and silver prices dominated the financial
news this week. On Tuesday, Fed chairman Ben Bernanke commented on an
"uncomfortably high" core inflation rate and said that inflation risks
still remain on the horizon. And, although the Commerce Department on
Thursday announced real consumer spending rose in October following two
"lukewarm months," there was news that other sectors of the U.S.
economy have not fared as well: Sales of new homes fell 3.2% in October
according to a Commerce Department report on Wednesday . . . while the
National Association of Realtors said on Tuesday that prices of existing
homes sold in October fell for the third straight month. The Labor
Department announced on Thursday that U.S. workers filing initial jobless
claims climbed by the highest amount in more than a year last week. On
Tuesday, the government reported that durable goods orders for expensive
items like cars and refrigerators posted the biggest drop in more than
six years in October. On Friday, the Institute of Supply Management
released a report showing that U.S. manufacturing shrank in November for
the first time in over three years. On Friday, the U.S. Dollar fell
sharply against other currencies, touching a new 20-month low against the
euro and a 14-year low versus the British pound.

In the precious metals markets this week . . .

GOLD:
Monex spot gold prices opened the week at $641 . . . traded as high as
$649 on Friday and as low as $633 on Tuesday . . . and the Monex AM
settlement price on Friday was $645, up $16 for the week. Gold support is
now anticipated at $637, then $630, and then $614.50 . . . and
resistance anticipated at $648.50, then $664, and then $682.

SILVER:
Monex spot silver prices opened the week at $13.46. . . traded as high
as $14.06 on Friday and as low as $13.44 on Tuesday . . . and the Monex
AM settlement price on Friday was $14.00, up $.96 (more than 7%) for
the week. Silver support is now anticipated at $13.85, then $13.50, and
then $13.24 . . . and resistance anticipated at $14.20, then $14.78,
and then $15.20.

PLATINUM:
Monex spot platinum prices opened the week at $1,181 . . . traded as
high as $1,185 on Monday and Tuesday and as low as $1,139 on Monday . . .
and the Monex AM settlement price on Friday was $1,157, unchanged for
the week. Platinum support is now anticipated at $1,148, then $1,130,
and then $1,097 . . . and resistance anticipated at $1,189, then $1,225,
and then $1,280.

PALLADIUM:
Monex spot palladium prices opened the week at $327 . . . traded as
high as $330 on Thursday and as low as $317 on Wednesday . . . and the
Monex AM settlement price on Friday was $327, up $3 for the week.
Palladium support is now anticipated at $322, then $315, and then $305 . . .
and resistance anticipated at $333.80, then $345, and then $360.

QUOTE OF THE WEEK:

From legendary market analyst and commentator Richard Russell, on his
Dow Theory Letters website this week:

"I can't emphasize strongly enough the importance of the dollar as the
world's reserve currency. Think of it -- the US continues to run
enormous trade and budget deficits, yet the rest of the world continues to
accept our fiat dollars, dollars that are not a claim on gold, dollars
that are not a claim on silver -- dollars that are not a claim on
anything! All the goods and merchandise and services that the US buys from
the rest of the world are bought with these fiat dollars. Dollars are
what the world has been trading with ever since World War II. Dollars
make up the great bulk of foreign reserves of almost every nation in the
world.

No other nation would be able to get away with what the US gets away
with. And it's all because the rest of the world accepts dollars, and
it's all because the dollar remains the world's reserve currency."

"Meanwhile . . . the US and the rest of the world are swimming in
liquidity. Private funds are in high-gear buying out corporations while
corporations are buying out or merging with other corporations. The
numbers are mind-boggling, and it appears that today's billion dollars are
simply yesterday's million dollars.

The enormous liquidity is finally beginning to trickle down to the man
on the street, which means that wages are now rising. This is worrying
Dr. Bernanke -- on the one hand it's nice to see the average family
doing better -- but on the other hand rising wages lead to inflation. A
little inflation is fine with the Fed, but rapid inflation puts the Fed
in a bad light and is not to be tolerated. The purchasing power of the
dollar may decline year decade after decade, but the death of the
dollar has got to be slow and subtle. In that manner, the populace can be
kept "dumb and passive." That's the Fed's way."




This is not a recommendation to buy or sell.