I REMAIN BULLISH ON GOLD & SILVER

GOLD

Despite temporarily lower prices, gold and silver’s strong fundamentals haven’t changed one bit. If anything they have only gotten stronger. We have recently seen that gold mine supply through the first half of the year amazingly dropped 2% year-over-year on 10% higher cash costs as the continued supply constraints from the difficulties in finding world class low cost gold mines remain. Likewise, we have also seen that despite stepped up September gold sales ahead of the annual September 26th deadline, the European Central Banks (for the first time in seven years) will likely fall about 20-25% short of their 500 ton gold sale maximum quota as central bankers led by the Germans begin to realize the investment value of gold.

SILVER

Despite silver being 30% off its yearly high, SLV just recently reached a new peak number of ounces in its vaults. A world record monthly trade deficit of $68 billion was recorded in August by the U.S., which once again should be long-term U.S. Dollar negative and gold and silver positive. Yet, despite all this, panic has set in the metals markets. Most investors seem quite confident that a commodities bubble is unwinding and gold and silver will be no different than copper or natural gas for that matter.

"The demand for the Silver ETF has been remarkable with the holdings breaking the 100-million ounces mark in the past few months," according to Peter Spina, chief investment strategist at GoldSeek.com.

"The investment demand in silver is remarkable and only reaffirms earlier projections that the silver price is set to move past prior record highs in the foreseeable future," he said, adding that the "price is ready to move past $15 once again and we should be looking at the $25 mark as the next major upside target in 2007."

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