Well gold and the gold stocks had a good day today which was forshadowed by the relatively calm day in gold paper trading on Monday.

It would seem to me that the worst of the gold bear raid is over and a bottom was put in at the 1040's and I expect gold to get back to 1100 by the end of the week.

Volatility in the currancies on a dayly basis has gotten extreme. Reminds me of an old jalopy speeding down the road rattling and shaking because everything is worn out and loose. All that is needed is one small pothole and it is either going to fall apart or crash spectacularly. I do not think that speed bump is far off.

Gold and the gold stocks seems to be rising and falling with the girations of the DOW. This is very peculiar because the resource industry and the rest of the main stream equities should be counter cyclical.

Resources represent imput costs and when there costs are high the earnings of all those companies that use them are trimed as a result of lower profit margins and thus they do poorly which is reflected in there share price under normal conditions.

Resources prices being high, signals a shortage for whatever reason and thus those resource companies still producing them have pricing power and increased margins and profitabilty which once again should be reflected in there share price.

These are generalized statements but reflect basically why resources are considered counter cyclical investments to the general equity markets and should not mirror there moves as they have been for some time now.

One possible explanation for this is that the establishment is proping the DOW around the 10,000 number which is appearently psychological to many people. These very suspicious large upward moves that mysteriously errase hundreds of points lost in the last hour of trading prop the markets and allow the insiders to continue to sell at elevated levels. The general equities markets clearly wish to head lower.

On the other hand this reinforcing of the DOW disguises the large upward moves and accumilation in the resource stocks which clearly wish to rise. If the DOW were to plunge while the resource stocks rise this would clearly mark the disconect between resources and the general equity markets that many invetors have been waiting to see. This would create a rush into them which the establishment does not wish to happen just yet because they are busy accumilating them themselves. Creating the pattern of connection between the resource stocks and general equities will also provide one last buying opportunity for the establishment when the general equities fall form this level as the fundimentals indicate they should at the moment. Those investor who have been conditioned like Pavlov dogs into this relationship will then also sell and miss the final disconnect between resources and the general equities market.

The gold and silver shares had a nice rise in the very last minutes of trade today which was nice to see. Almost always it is he other way around. This is indicative to me that time is running short on this bear raid.

All in my honest opinion of course as always.

F.F.