The Twiggs chart shows a downward trend for gold. If you draw a line through all the descending high prices, and extend that line forward, you will be drawing a "line in the sand" where traders will be making decisions.

If gold moves up through that line, then there is likely going to be a gold break out. Anything less means that Gold is going to sidetrack at best and in time drift lower.

I strongly believe that there will be significant upside to Gold, which will not be impacted by the U.S. equity market. In fact, I do see this down-sloping trend line to be smashed and Gold prices rally into the 700's from the current 500's, at the same time as broad equity market indexes decline.

Such a counter-cyclical move would support the prices of the precious metal miners, which would then serve as portfolio hedges.

Right before the Big Break-out in Gold, I expect a major test (of possibly 540) that will shake out the weak hands. That will be the time to buy.

Over 40 years I have been a keen observer and participant in gold markets. Like many of you, I was caught up at an early age by the glitter of precious metals, and the huge risks and potential rewards of mining.

When gold markets were in a Bull phase, I have been a flat-out Bull, knowing full well that during periods of extreme volatility there would be challenges to my credulity. I knew there would be people who call me perma-Bull with respect to Gold.

None of that bothers me because I know the truth.

The truth is that when I believe that the Gold has commenced a secular Bear phase, I will become bearish. And at that point there will be Gold Bugs who disapprove.

But the current Gold market is in a secular Bull presently for the simple reason that there is a War On Terror. Nobody wants this war. Everybody can debate why it has come to that. But the fact is that the major participants are printing money at an excessive pace to pay for it. That taxes the rest of the world because it puts out of balance the global forex markets, which in turn disrupts the stability of global import-export trade, which is essential to steady economic development. Consequently, the nations who don't consider themselves at war " at least not in the War On Terror " feel themselves compelled to print money at excessive rates as an attempt to stabilize cross-rates in the forex market.

The War On Terror " as long as the reasons are pure -- is a necessity. Once there is agreement on that by all economically powerful nations, there must be a General Agreement on Currencies. That is the mission of U.S. Treasury Secretary Paulson. If anybody has ever had the right credentials to make it happen, he would be it.

Henry Paulson is in China presently trying to convince the Chinese authorities -- who he knows well and respects and who know him well and respect also " to move toward that currency agreement.

I have said this for at least a year now. The imbalance and extreme volatility of currency markets is the most serious problem the world faces. Solving that problem will help solve others, like addressing the urgent issues of poverty and health.

But until that happens, there will be excessive money printed by all nations, and Gold will rally in a secular Bull trend. If you wish to be a cynic and say that such a General Agreement on Currencies will never happen again, and that Gold will go to $1,000, $2,000, $4,000, $10,000, or whatever, that is your prerogative. You can even be a cheerleader if you wish " just don't count me in the group.

I do believe that prudent leaders of the world's economic elite will resolve their differences sooner than later because they understand the consequences. They only have so much Gold in their possession " some like Canada have none, after having sold it all.

When all the govt gold is sold to private owners, then central bankers will have lost their ability to use the precious metal as a monetary policy and control instrument. At that point the world will have in effect a gold standard because any excess printing of paper money from that point will immediately be factored into lower market prices for that currency.

A lot is being written these days about central bank gold sales. I think more should be written about the need to get a global agreement on currencies. Once the latter happens, the world business and economic paradigm can normalize.

Sure, we'll all be facing issues related to personal privacy and other rights, but that is a consequence of the need for personal safety. The upside is that capital owners and managers will start to commit that capital to long-term economically-viable projects rather than using it for share buy-backs and the like.