Gold closed flat last week, but appears headed to rally into the end of the year.

I think the metals are likely to continue to rally into 2006, but like the rest of the broad equity markets in the world, I think the rally is getting long in the tooth, and will likely start to pull back in January. So, I am going to suggest that the gold rally starting today will fall short of the last one ($541 on Feb-06 gold), possibly reaching $530. Then I foresee another test of $500, probably bouncing off $490, before closing 2006 over $600.

Not to worry for the long-term if you happen to believe, like me, that gold represents the best value in the market today. I truly believe that, based on economic fundamentals that are in place (the credit bubble in the U.S. Japan and China, in particular) along with monetary policies in place to stave a crisis, the gold and silver price is going much higher.

Some traders think that a deflation leads to a collapse of the gold price, but that is not true. During the America's greatest deflation of the past 100 years, the Great Depression of the 1930's, the reflationary policies of the Fed and the Treasury were such that a part of the huge increase in money supply was invested in gold.

In the past five years, foreign investors have acquired massive increases in the U.S. Treasury Notes -- from about 34 pct of the total in 2000 to 40 pct by 2002 and now over 50 pct. What is going to happen after the USD falls in 2006 is that foreign investors will not be so inclined to hold that debt. As they sell, the interest rates in the U.S. will rise. Moreover, as new Treasury paper is issued in order to pay for the debts of government in 2006 and beyond, the absence of foreign buying will have to be met by U.S. buyers. Any shortfall will have to be met by further printing of money.

So, as I see it, higher interest rates will reach an inflection point where prices of houses and equity securities will fall. The massive reflation will attempt to maintain a stable bond market, and at the same time will result in much higher metals prices. I have set a long-term (i.e., greater than one-year time horizon) target of higher than $600 for gold. But the price could go much higher.

Today in Barron's (Dec-27-05), there is a quote from well-known Hong Kong money manager Marc Faber that he believes that $3,000 gold is an eventuality. I tend to agree.

Anything's possible of course; all a long-term trader can do is try to be on the right side of trend. And the long-term trend today is up.

Weekly Gold EOD Continuous Contract Index:

Daily Gold EOD Continuous Contract Index:

This interactive chart shows the recent trading for the Gold Bullion index.

The trend for silver is also up. Last week, silver was up +0.59 pct W/W to 8.57. It has traded this month to $9.27.

For the near-term, I expect silver will trade back into the $9.00 range, linked to the gold rally, before re-testing the low $8.21 level in 1Q06.

Beyond that, I expect to see much higher silver levels " at least $10.00 in 2006.

Weekly Silver EOD Continuous Contract Index:

Daily Silver EOD Continuous Contract Index:

This interactive chart shows the recent trading for the Silver Bullion index.

Last week, Platinum closed up +0.45 pct W/W at $965.30. In mid-December, it had spiked to $1027. I'm expecting to see platinum to rally in the near-term with the rest of the precious metals group back up to about $1,000, before falling back to maybe $950 in 1Q06. Later in the year, I expect to see a new high at $1,100 or better.

The big stock here is Impala (IMPUY otc), which supplies about 25 pct of total world demand, and has about 60 years future global supply in reserves (i.e., proven and probable resources in the ground).

Weekly Platinum EOD Continuous Contract Index:

Daily Platinum EOD Continuous Contract Index:

This interactive chart shows the recent trading for the Platinum metal index.

Last week, Palladium was down significantly "2.58 pct W/W to 257.55. The rally may see palladium move up to maybe $275-290 early in 2Q06, before testing recent lows at about $250. For 2006, I expect to see a high price that exceeds $350.

The big companies here are Stillwater Mining (SWC) and North American Palladium (PAL).

Weekly Palladium EOD Continuous Contract Index:

Daily Palladium EOD Continuous Contract Index:

This interactive chart shows the recent trading for the Palladium metal index.

Copper was up +0.80 pct W/W to 205.13, just off the record high closing week price of 205.86.

Weekly Copper EOD Continuous Contract Index:

Daily Copper EOD Continuous Contract Index:

This interactive chart shows the recent trading for the Copper metal index.

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The Philly goldminer index ($XAU) was up +2.17 pct W/W to 125.02. It's closing in on its high of 127.00 of just two weeks ago. So all you goldminer bears ought to have another look at the charts.

Weekly U.S. Goldminers Index:

Daily U.S. Goldminers Index:

The XGD Toronto Exchange-listed goldminer iUnits S&P/TSX Capped Gold Index ETF TSE:XGD was very strong.

XGD was up +3.79 pct W/W to 61.03. I'm long; and I'm glad I recommended hanging in.

Here are the Weekly, Daily and Hourly data charts for the TSX Goldshares (XGD) index:

XGD Weekly data:

XGD Daily data:

XGD Hourly data:

For an interactive look, here are links to the Hourly data charts of three groups of proven goldminer stocks. You can click on the tabs for the Monthly, Weekly and Daily data charts.

List #1

List #2

List #3

Here are the five heaviest weighted Silver stocks in the market along with their interactive (click on the link in the heading) and current charts (below) for the 30-minute, daily, weekly and monthly time series data analyzed with the RSI:

30-Minute Data Charts of Silver Stocks

Daily Data Charts of Silver Stocks

Weekly Data Charts of Silver Stocks

Monthly Data Charts of Silver Stocks

Here are the two major Palladium stocks in the market along with their interactive (click on the link in the heading) and current charts (below) for the 30-minute, daily, weekly and monthly time series data analyzed with the RSI:

30-Minute Data Charts of Palladium Stocks

Daily Data Charts of Palladium Stocks

Weekly Data Charts of Palladium Stocks

Month Data Charts of Palladium Stocks