Past week would have to be judged as good for those invested in monetary metals. Most important was that Gold and Silver held on to the gains of previous week, and built slightly on them. Such act ion helps build confidence in the change in sentiment.

Clearly the U.S. dollar's rally has broken down. Only the deluded mouse clickers at the hedge funds had believed the dollar was beginning something new. Continued weakness in U.S. dollar will be supportive of both metals.

News was also in the favor of Gold and Silver. U.S. inflation reports were not good. A change in trend for U.S. inflation is clearly evident. For more information on the economic numbers try www.gillespieresearch.com

Official holdings of U.S. Debt at Federal Reserve rose modestly, year-to-year change fell to $209 billion. Lower than last plot on chart in monthly letter. Suggests further loss of interest in dollar assets by foreign institutions.

Gold has moved to an over bought condition, as expected. This action will be the beginning of the development of the new pattern into which Gold is moving.

Basic Trend: Silver: Up Investors should focus on Buy signals. Strategy: Positive, Per Investment Policy of October 2004 Investment Policy: Emphasize Buys

Silver clearly has moved out of old lateral pattern in which it had been trapped. That set of trades now becomes support . Over bought condition building. Again, they help to identify the new pattern for Silver. Both metals could weaken next week as they try to find the bottom edge of new trading channels. That price action can be used to add to positions should it be significant.

NASDAQ is in serious trouble. Should the Composite Index finish this next week below 2034 confirmation of failure will exist. That should push more traders into an interest in dollar and metals. They like the path of least resistance which is down for U.S. dollar and up for Gold and Silver.

Recommendation: New positive patterns developing for both metals. Hold for higher prices.

Your Eternal Optimist;