First, everybody has a different time horizon " from minutes to multi-years. So, in that context is the PM at a peak here? Hahaha.

This is a tough call. A while back, I wrote that only your barber/hairdresser knows. As least, they probably know as much as you or me.

Whenever markets get caught up in a parabolic move " up or down " the price action is based mostly on emotion (i.e., greed or fear). But there are ‘tells' that we can look for.

Longer-term, the metals are going to move on the basis of real interest rates. Today, even with rates on the rise, due largely because of global money supply growth that far exceeds GDP growth, those rates are behind the curve of "true" consumer price inflation.

So financial assets, including currency (which happens to be an unallocated asset), are falling behind the price growth of physical assets like oil, metals, undeveloped land, and the like. That's not a U.S. situation exclusively, but a global condition.

Depending on supply-demand factors for physicals, the price could rise faster for some more than others. For industrial-commercial reasons, the demand today is higher than supply.

Right now, the precious metals complex is also in strong demand because of the monetization (i.e., investment) factor. It is easy now to buy a Gold ETF (GLD and IAU in the U.S. for example, plus others in other countries).

Since the bullion pays no (or not much) economic return, I often refer to it as speculative demand rather than investment demand, but that's not really true.

Land banking is not considered "speculation" by most people but there are taxes and other costs of holding raw land, and holding it is really a speculation that economic factors will sooner or later drive the price higher, and since the supply is limited, the price will tend to move higher just based on inflation.

Same thing for precious metals. In this case, there is global inflation (whatever the true number is), and there are economic reasons (war, strange monetary and fiscal policies, etc) that are pushing that inflation number higher than usual. So there are traders who are holding precious metals for "investment" as opposed to what they would call "speculation".

So, if you can get past all the semantics, there are reasons why I stated two years ago that precious metals would continue to rise, and why to start the year I called 2006 the Year of the Metals.

But now the conditions of markets have changed, and that always happens when price series go parabolic. Today, as I say, it is emotion more than any other factor that is driving the precious metals prices.

The fear and greed is exacerbated by a great many drivers. A few would be: (i) the War on Terrorism" is not going well and may be expanded, (ii) social unrest is expanding in regions of the world where the precious metals and oil minerals are located, like Nigeria, Mongolia, New Guinea, the Middle East, etc, (iii) confidence in the U.S. Administration and Fed's ability to manage a strong $USD has fallen to a new low, (iv) promoters of precious metals related securities are working overtime to hype the public, and (v) on and on.

I have seen all this before. Very little changes.

Let me give you an example. I intend no ill will because I know these people.

Let's look at a Vancouver BC-based silver player by the name of Avino Gold & Silver (TSX-V: ASM) that also trades OTC in the U.S. as well as on the Frankfurt and Berlin Exchanges. The company was started in 1968 by Lou Wolfin " a guy who would make my World All-star Stock Promoter's Hall of Fame. I like Lou.

In four quarters from late 1978 into the end of 1979 and January of 1980, Avino (then VSE-listed as AVO) jumped from about 25 cents Cdn to over $5.00. Silver was hot, and Avino had a small mine in Mexico; but the key reason for the price move was undoubtedly Lou Wolfin.

In any event, five months after reaching well above $5.00 (close to $5.50), AVO had dropped back to $1.40. Why? Silver was still running hot, so let's say I'm presuming Lou was selling a few shares.

But you know, from May into November of 1980, Lou got that AVO right back to $5.50. Good promoters can do those things.

Then less than four quarters later, AVO was back at $1.50. Over the years, Avino had its ups and downs (the Mexican mine stopped production in 2001 after a 27 year run), but the Wolfin's persisted. Lou was joined in the business by David (his son, I guess), who had been a floor trader on the old Vancouver Exchange. Now David is acquiring silver properties in North America.

You see, Avino needs product if the Company is going to promote stock. And it needs a good PR guy too. Avino has a real good one " a friend of mine from the early 80's by the name of Michael Baybak.

I saw Michael at PDAC a month ago, and we agreed to get together again by phone. I didn't remind him of when he arrived one winter's day in Toronto from L.A. to meet some clients of mine who needed a good PR guy " and I brought them the best. So it's minus 40 and blowing snow like I couldn't remember when. Michael is wearing a light trench coat and beautiful shoes with no over-boots. He was dressed for L.A. His first appointment was at a clothing store.

So, I just want to remind you that Avino (a new ticker symbol after a few roll-backs) is at C$3.81, after reaching $4.31 earlier in the month, up from a 52-week low of C$1.11. That's what a hot silver and gold market can do.

I hope Lou and David can come up with a new silver mine. I really do; Like my friend Rui Feng, whose exploits I wrote about recently.

Rui is now worth almost 20-pct more than he was three weeks ago, and he was up to about $100 million then based on his SilverCorp (TSE_SVM).

To close this off, let me say that when $SILVER was $10 a month or so ago, I said I believed we'd see it at $15 before the top. We're almost there.

I'll write more about this in the afternoon, now that my mind is on it.

Isn't trading interesting? You get started, and you can't stop.

Now everybody's an expert! And, nobody really knows much except that things never change. What goes around comes around.

---

p.s.,

I knew there was a name from the past linked to Avino. It's Bill Kocken, Avino Director, who when I knew him was CEO of the old Terra Mines. Terra acquired four silver mines from the Hunt Brothers after their bankruptcy in the early 80's (after trying to corner the global market for silver by buying all the silver mines). Along with the Merrill Lynch Canada mining amalyst, I went up to the Artic Circle north of Yellowknife NWT to look at the four Terra properties. After being underground in one of them, our group got dynamited by accident -- I lost a lot of hearing over that -- and then I returned to Toronto with pneumonia. Almost died on the plane.

Oh, the memories.