It is enough to make a gangsta rapper curse. The cost of bling is rising sharply. On March 5th gold took a pot shot at $1,000 a troy ounce, hitting a record $991.9. It is widely expected to shoot even higher than that in the near future.

Over the past few weeks we've devoted a fair amount of commentary space to the fact that gold stocks, as a group, have performed poorly relative to gold bullion over virtually all timeframes up to about 2 years.

Gold surged above $850 to new record highs as the new year began. This is exciting but gold could become even more exciting now that it’s in uncharted territory.

Gold critics often say that the shiny yellow metal has few industrial uses, compared with, say, silver or copper. That happens to be what we call a half-truth. It’s also beside the point. It is usually lamented by bears refusing to accept the market’s valuation of gold.

For the gold bugs, Christmas has come early. Not only is the price of the yellow metal around $800 an ounce, having even surged within touching distance of its all-time high in recent weeks, but some of their dire predictions are being at least partially fulfilled.

With gold ratcheting up to new highs in the $800’s, we may easily see $850 and even $900 very soon. Oil is going out of sight, but there are some good fundamental reasons – like Yemeni pipelines blowing up, North Sea shutdowns, the ever present new manifestation of Mid East turmoil – and a Pakistani political crisis as they impose state of emergency measures.

Gold seems like a good buy when everything else feels too risky. Most people expect the stuff to act as a store of value over the long term. And even if it goes down, gold can still be hammered into pretty shapes and worn around the neck to impress the neighbours, something that cannot be said of depreciating share certificates.

Encouraging signs from current Gold prices continue to build the case for a sustained move in Gold Stocks.

Investment Update
Silverado Gold Mines Inc. (NASD OTCBB:SLGLF ) (Frankfurt: SLGL) (Berlin: SLGL) has discovered a new network of richly mineralized gold-antimony quartz vein structures at its wholly-owned Nolan Gold Mine in Alaska’s Arctic Circle region.

With a commodities bull market in full swing, commodities-stock investors have enjoyed incredible results leveraging their favorite commodities. And commodities-stocks' performances have vastly exceeded the impressive double of the major market indices over the last four years.

Back in the depression year of 1932 silver was suffering. It had hit a low price of 24 cents per troy ounce as the forces of deflation assaulted commodities across the board. Could things get any worse as no end seemed in sight to the widespread massacre of assets across America and the world?

With metal prices at all-time highs, investment dollars continue to pour into the metals markets. Investments in metals over the past couple of years have been primarily directed to the major producers. With the shares of the big companies reflecting the present elevated metal prices, investors are now looking for other ways to find value in the metals sector.

Economic historians will look back at this decade, as the decade of complacency. Consider for a second, the definition of complacency…

There was a time when the annual convention of the Prospectors and Developers Association of Canada drew a crowd of rough characters from Canada's northern bush intent on whooping it up in the big city and telling tall tales to financiers about their mining claims.

In my opinion, the current bull-market in precious metals is primarily due to the ongoing monetary inflation (money supply and credit growth) and the subsequent debasement of various national currencies.

Most of the markets moved higher in 2006, driven by lots of liquidity. Commodities, stocks, precious metals and currencies...they all rose. Let's now see how they ended the year...  

Gold, silver, their shares and the resource shares have finally started to rise. It took a while and for many, the five month correction from May to October seemed endless.

There is nothing that possesses all the qualities of money in the way that gold does, so there really isn't a competitor to gold as "the ultimate money". Base metals do share a number of qualities of money with gold. They represent assets which have a value based on usage.

While the Dow may soon briefly take out its old 11,700+ highs, the real story of late in our opinion is the recent pummeling of all commodity markets. Though we follow oil, natural gas, copper, and other commodities with great interest, our continued belief is that the best risk/reward set up in the major commodities comes in the form of the precious metals - namely gold and silver.

If you spend (waste) a lot of time reading or listening to the explanations in the mainstream financial press for why the gold market did what it did on a particular day you will probably come away with the impression that the oil market drives the gold market.

Something big has been happening in the world in recent decades. This isn't something you'll hear about in the news because it's not just one event. It's a series of events that are happening gradually and sporadically, but early signs point to a mega world power shift, which could end up being as important as the Industrial Revolution, increasingly affecting us all, in one way or another in the years ahead.

Shortly after gold resolutely surged through $500 with nary a backward glance, noted expert after pundit began to board the gold correction bandwagon. At first there were a few. But one by one, as gold drove unimpeded higher, their number swelled.

Gold is soaring. On May 01, it rose over $18 and reached yet another new 25 year high. Silver has been in a league of its own. It’s been soaring too and it’s been even stronger than gold. The other metals and oil are surging as well, and so are gold shares, energy and natural resource shares.

When George W. Bush was inaugurated on January 22, 2001, the price of gold was $265.90 per ounce. Mr. Bush has been among the biggest spenders and his "guns and butter" policies have caused a devaluation of the US dollar. Gold's rise then should come as no surprise.

The junior exploration sector led by the gold explorers are finally beginning to come to life. As a group they peaked in early 2004. That ended a stage when these small companies were discovered by the first few, farsighted investors. Company after company saw their share prices rise not by 10%, 20% or 30%, which would have made normal investors happy, but in many cases by a multiple of one, two, three or even five or ten times their share prices of but only a year or so earlier.

To set your mind at ease, I am in no fashion suggesting the immediate sale of gold or the junior exploration sector shares. On the contrary, I am confident that they should instead be accumulated during this nerve-wracking time for most gold investors. It is my belief that following this course of action will allow us to later distribute our investment positions when their prices are far higher, and when other investors are clamoring for them.

Nothing swells the breast so much as the thought that you have been proved right at last. After riding high at the start of the 1980s, gold bugs had a miserable couple of decades. The price declined relentlessly, mocking their credo that the security of the financial system ultimately depends upon the yellow metal. Lately, though, the faithful have enjoyed their reward.

There has been no shortage over the past two decades of would-be foreign gold diggers rushing into China in search of treasure. But for most of that time China's gold industry itself was off limits to outsiders, with mining and refining controlled by parochial and xenophobic state officials. Indeed, much of China's gold production was traditionally shrouded in secrecy and managed by the military. Now, foreign operators are finally getting a foot in the vault.

Since the dollar started falling in 2001, mining companies’ costs have gone up dramatically from their 1990s feasibility studies...At the same time, gold investors are extremely bullish, convinced that we are in a roaring gold bull market, while gold mining companies are unable to increase revenues even though the gold price has almost doubled.

The lure of buried mineral treasures – and on a world-class scale – is a tantalizing incentive for intrepid North American mining juniors to become part of China’s new Gold Rush. But many of them are destined to find themselves chasing an ever elusive pot of gold at the end of the rainbow.

Attacks by terrorists linked to al Qaeda and other radical Islamist groups have recently begun to occur with greater frequency. Also, the recent attacks have been small-scale compared to previous efforts and appear to have been carried out with less preparation. All of which suggests increasing desperation on the part of the barbarians.

For the past three years gold has marched in lockstep with the dollar. As the dollar weakened, at first due to declining US interest rates, and later from fear of growing imbalances, the gold price rose in dollar terms, FNB chief economist Dr Cees Bruggemans writes this week in his 'Weekly Comment' article.

Gold remains bullish, despite the drop in gold shares and the rising U.S. dollar. This alone is unusual and it raises an important question… Could gold shares be leading the way down for gold, or will gold’s firmness eventually pull the shares back up?

It’s easy to get sidetracked with so much going on in the world and markets today. This often makes it hard to see the forest for the trees. That’s why we feel strongly about keeping the big picture in perspective. While we certainly don’t claim to have all the answers, after 30 years of following the markets every day we’ve learned the big picture is the most important when it comes to investing. But this also means patience is needed.

I believe the base metal stocks are going to extend their bull market for a long time and well beyond the consensus "group think". There will be corrections along the way but I believe these stocks are going to surprise everyone over the next few years. My reasoning follows below.

Gold has been declining for nearly three months, which has discouraged some gold investors. But putting this weakness into perspective, you’ll see it hasn’t been a big deal. For now, we’re going to focus on gold’s technical price action because this strips away the emotions, reasons and what ifs. In other words, this shows what’s truly happening. So let’s stand back and look at gold’s big picture first.

China's runaway economy will continue to spur on boom times for the global mining industry, a distinguished panel told investors at the 2005 Vancouver Resource Investment Conference on Jan. 23.

Some gold bugs are being foolish. Gold stocks have been under performing the price of gold now since November. Gold stocks tend to lead gold so when they begin to lag the price of gold it usually signals an upcoming correction in both. And that correction is here. Gold bulls should see this correction as a godsend - a chance to buy into gold stocks - and hold them - ahead of a coming collapse in the dollar and explosion in gold prices. This will cause a parabolic rise in the mining shares in 2005.

Is the rise in the price of gold merely the flipside of the dollar’s fall? Or does it point more broadly to a loss of faith in central bankers’ promises?

Much has occurred during the past few months that drew me to the conclusion that gold and gold equities are approaching a period when they will shortly resume their secular Bull Market advances. I have recognized and discussed during this time my belief that the gold price would be under pressure until after the upcoming presidential election. Further, it has been my contention that no effort would be spared to maintain orderly stock, bond and gold markets, in order to help the incumbent remain in office.

Resource traders can be forgiven for thinking that company after company left the field this year without shipping any samples to the lab. As we've noted in the past few months, the assay lab sector has been more than a little overwhelmed by the huge renewal of the exploration business after the longest funding drought in memory. It varies depending on the specific lab, but it's clear that turnaround times for results have probably tripled in length over the past year or so. This has been frustrating for all concerned, but especially for seasoned investors.

The dollar has been strong over the past two weeks. Greenspan says everything is okie dokie: the US economy is not in trouble. According to him the economic recovery in the US is broad-based and sustainable, in spite of rising interest rates, war, a soaring budget deficit and declining retail sales.

The oil price is hitting record highs. Gold remains in a bull market, despite its recent decline. Terror and unrest are on the rise. Is there a connection between these markets and world events? Absolutely, and it’s intensifying.

The recent volatility and weakness in gold has been worrisome to many investors. Is this it? Is the bull market rise over? Or will gold head higher again? These seem to be the questions of the day, and at times like this it's important to stand back and look at the big picture since it helps to put things into perspective.

( For The Latest On Muskox Minerals, See The Resource World Story - click here to view PDF  )

There are two magic words in the deal world these days: "China" and "gold".

You can't lose with either one. On the one hand, you have a country where if you can sell just one unit of anything to more than 1bn people, that adds up to a lot of money. On the other, you have the only financial asset that can keep its value through political and economic turmoil, except when the price of the metal goes down.

If the experts are right, the recent corrections in the major markets, including gold, may soon run their course. Key indicators point to a continued strong bull market, for both gold and silver.

Gold is looking very good and the action is strong and bullish.

You may remember last month we thought the intermediate gold rise was over, but it obviously wasn't. The rise has been extended, in large part due to the weakness in the U.S. dollar. We felt this might happen, presenting a possible twist in the gold picture, and with the dollar now hitting new bear market lows, gold is showing great strength.

Gold declined 15% over nine weeks. This scared many investors, especially those who didn't believe a bull market was underway.

But gold was essentially moving from weak hands into strong ones. The decline since February was what we call a steeper D decline. It would've been nice to see a milder correction but, more important, it was a normal bull market downward correction, not a bear market decline.