As far as I am concerned the key point to watch this week is whether or not gold can hold above the $1550 barrier. We are above that level this morning as I write this, but so far this month every time gold has risen to challenge that price an immediate and severe smackdown has materialized. I do not interpret every downtick as an intervention by the Cartel, but I also know the trading in the metals is managed and for sure there are technical levels that are defended. Gold is in a bull market for reasons beyond the ability of paper gold to contain. We know this. But intraday and short term trading is heavily influenced by the paper gold market.

I have read many reports that physical bullion remains in high demand. Mine supply is not seasonal. It is during the summer months that physical bullion demand often declines and that accounts for the seasonality that is widely reported. So if indeed we are still seeing very strong buying from India, China, and Russia, plus the above average purchase strength in the US, and now add that retail buying due to instability in Europe, one may assume that the 'seasonality' for gold this summer is a non-factor. Therefore the physical bullion demand will swamp the paper gold intervention again, as it has for the last 10 years.

On the eve of COMEX op-ex it will be very telling if the manipulation to contain gold below $1550 fails. Bollinger bands for both gold and silver are very tight, indicating a big move is at hand. Once a sustained rise above $1550 commences, a lot of technical traders will pile back on board. This would fuel a breakout to a new all-time high for gold and probably drag silver high with it.

Now add in the appearance that many of the quality PM juniors have bottomed. Rising metals prices could start the next uptrend for the stocks. Consider that many investors are completely out of the sector, on the assumption of 'seasonal weakness', which as I described above, may not happen this year. See the potential for a major surprise move higher?

cheers!

mike