-->

Gold's"A" rise is underway and the D decline is over. Gold closed at a ten week high yesterday and it's rising versus the euro. Silver reached its 1987 highs, platinum is nearing its 1980 highs and palladium closed at a 16 month high. The precious metals are heating up as a group and they're strong above $407 for gold, $7.00 for silver, $865 for platinum and $250 for palladium. Copper and oil are holding near the highs and both are strong above $1.22 and $36, respectively. Gold is heading towards its January closing high and if surpassed above $427, the bull market would be in full swing. Keep in mind,"A" rises tend to consolidate and reinforce the prior strong C rise, but gold doesn't necessarily close at a new bull market high. This means gold could fluctuate between $427 and $407 during the"A" rise, and the bull market would be solid and the steps in place. Silver is super strong and it's taking on a new form, but since the silver shares haven't risen with silver (as they have been working off an overbought situation which is about finished), we could see silver take a breather from its sharp run-up. It's very strong nonetheless above $7.00.

Gold shares have been holding firmly above the January 29 lows, and while they've been lagging gold, the major trend still favors gold shares over gold. Gold shares are oversold and some like GLG, BGO, NEM, ABX, GSS and WHT are starting to rise. XAU and HUI will continue forming a solid base by staying above 94.50 and 213.18, respectively. A close above 235 on HUI means a renewed rise is starting and it will be confirmed above 242.03. PAL is strong but it's now overbought and it could take a breather. Buy the strongest gold shares as well as the silver shares.

The U.S. dollar's rebound rise is still underway in spite of gold's rise. If the dollar index (basis June) closes and stays above 89.60, it could still rise to possibly the 92 level before the rebound is over. But once the dollar index closes and stays below 87.40, the rise is over. Keep an eye on 89.60 and 87.40; a break either way will tell the next short-term trend direction. The euro declined to a new low today on speculation that the ECB may cut interest rates. But it still looks like the rising yen is leading the currencies out of the decline. The yen is strong above.9300. The currencies are not out of the woods yet until they close and stay above; 1.24 euro, 1.85 British pound,.7550 Aussie,.6630 Kiwi and.7575 Canadian. The currencies are getting closer to an oversold area while the currency funds like ICPHX, PSAFX and FAX are oversold. Keep your positions and buy new ones now and over the coming weeks.

Stocks continued to fall this week as the Dow, Nasdaq and S&P 500 fell to lows last seen in December. Transportations led the decline and it continues to be weaker than the other indices. It fell to a 5½ month low and it's now below its 40 week moving average for the first time since the rise began. This means it's moving into a weaker phase by staying below 2810. Nasdaq, the first index to follow Trans down, has now fallen to its 40 week moving average. A weaker phase will begin if it closes and stays below 1900. Nasdaq is weak below 2000. The Dow and S&P 500 are both weak below 10450 and 1120, respectively. Semiconductors fell to a five month low yesterday, while Utilities are looking uncomfortable near the highs. Even though the market could rebound some, don't buy because the one year rise is clearly over. Stay out of the market.

Bond prices held quietly near the highs this week. They could still rise further short-term as long as the yields stay below 4.75% on the 30 year and 3.85% on the 10 year. The 10 year could still decline to 3.55% while bond prices rise, but even if it does, bonds would still be forming a major top (major bottom for long-term yields).

Continue to stay out of the world equity markets.

Warm wishes and until next week, Pamela and Mary Anne Aden