THE GRANVILLE MARKET LETTER
P.O. Box 413006, Kansas City, MO 64141.
1 year, 46 issues, $250. 4-issue trial, $31. www.GranvilleLetter.com.

Bullish outlook for gold

        Joseph Granville, the 2005 Gold Timer of the Year as ranked by The Timer Digest, says Gold and Silver represents real money. His numbers strongly suggest sharply higher interest rates ahead and worsening inflation. Now he sees a far greater rise for gold coming from a unique source, the Federal Reserve. After March 23rd M-3 numbers will no longer be available. Mr. Granville contends that only the price of gold will tell you whether M-3 continues to rise. His objective for Gold is $1,000 within 3 years. He advises buying the stocks rather than the metals. Granville has constructed a portfolio of 23 gold and silver stocks.

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THE GRANDICH LETTER
available free of charge at www.Grandich.com.

Outlook for 2006

       Peter Grandich: "Gold: I remained staunchly bullish throughout 2005 and kept saying $500 gold was not a question of "if", but "when." I issued a special alert on December 9th noting that my technical work gave its strongest short-term sell signal in several years. Within a couple of trading days, gold fell $60. It has been my contention that gold is in a secular bull market and it has been rising in a two steps up, one step down mode. While the corrections are sharp and swift, it's the best of all worlds for the long term. Besides, we all know that it won't be near a top until TOUT-TV covers gold extensively for months and the two leaders of the "Don't Worry, Be Happy" crowd, Larry Kudlow and Jim Kramer, tell us gold is a buy - not good-bye.
       The factors that drove gold in 2005 all appear to be set to lead gold higher into 2006.

• Physical and investment demand - According to the World Gold Council (WGC), demand for gold coins, bars and bullion-backed shares rose 56 percent in the third quarter of 2005. Investors and jewelers bought $12.5 billion worth in gold, or 838 metric tons in the third quarter, up 7.6 percent from a year earlier. (Jewelry demand accounts for 73 percent of gold consumption). The rapidly growing economies in China and India have been key and while soft patches are likely going forward, the enormous wealth creation on-going there appears to assure strong demand for gold for the foreseeable future.
• ETFs - While gold pundits will argue if these investment vehicles are truly direct ownership of physical bullion, there's no argument that the introduction of them has added to overall investment demand. For every one person who may have bought physical bullion in a different manner before and now has instead invested in an ETF, I suspect 99 other ETF buyers are either first time buyers of bullion or used to buy mining shares as a proxy for gold (more on mining shares later). The bottom line is that gold ETFs are a net positive to the demand equation. And when TOUT-TV moves the oil babe over to the Comex, you can bet the "Talking Heads" will be preaching ETFs as a way to invest.
• Geopolitical concerns - Since gold has proven to be a reliable asset to own going all the way back to Biblical times, the marked increase of geopolitical concerns here and abroad can only help serve to underpin the gold price for the foreseeable future. While Iraq is the main centerpiece at the moment, another country that begins with an I is going to move center-stage - Iran (see comment below). While America continues to lose the love and affection of many in the world, I believe we're going to see some of the ugliest political mudslinging right here in the good ole USA. The wheels in Washington, already slowed in making progress on several critical issues facing America, are all but likely to come grinding to a halt as Democrats and Republicans act more and more like the Hatfields and the McCoys.
• Debt, deficits and the #1 crisis in America - While I love my country and am tired of having to defend it each and every time I travel outside the country, I do believe it continues down a slippery slope that has no simple happy ending. In fact, if all of America woke up today and stopped robbing Peter to pay Paul and lived only within our means, it would be years before the pain would ease and many would never truly recover. That's why seeing we remain full throttle downhill, I remain so bearish and trying desperately to educate people through both of my businesses.

       I believe the debt and deficit crisis has been one of the least talked about, but one of the major reasons why gold has performed so well. I've spoken to many sophisticated foreign investors and one of their core concerns is the out-of-control fiscal house of our government and many of our citizens. By 1980, U.S. public debt reached one trillion dollars--191 years after we first started keeping records (note that 1980 witnessed the last great run-up in gold prices). Now, just 25 years later, it's on the threshold of $8 trillion. In 1980, each American's share of the debt was $4,405. It's now $26,700.

       When we add the Current Account and trade deficits, we get a very gloomy future. But the number one problem that will tower over these already gigantic headaches is the aging crisis unfolding here, and to a lesser extent, in many other areas of the world (it will become acute in Japan and parts of Europe in just a few years). The social, political, economic and religious upheaval it can cause will have an indirect positive impact on gold because the U.S. dollar is going much lower over the next 3-5 years and interest rates will eventually (not in 2006) have to be much higher to continue attracting foreign capital to sustain us.
       Manipulation - I find it ridiculous when any and all comments about gold being manipulated are immediately dismissed as pure nonsense. Anyone who has been involved in the financial markets and in particular commodities can attest to several known past manipulations. So, why then is it so hard to give even a reasonable moment to the claim that gold has been manipulated and/or capped? For starters, it may have been the style of the person or persons that led this cry but like it or not, there's ample circumstantial evidence to support these claims. And, I would find it hysterical if it wasn't so sad to see so-called experts who have been so wrong for so long on gold ceremonially throw such claims under the bus yet the media doesn't question why these folks were wrong for so long. Yet, those who lead the manipulation bandwagon (www.gata.org) have been far more right on gold for several years now.
       Bottomline - taking in all the above and throw in the belief the U.S. dollar can renew its long-term downtrend and eventually break below 80 on the U.S. Dollar Index (more below), I believe gold has all the underpinnings to make former multi-decade resistance around $500 the new floor and a test of at least $600 in 2006 is quite possible.
       Silver - Called the "poor man's gold" by some, it too, has some strong underpinnings as we enter 2006 and should at least match gold's performance. I will likely heighten my enthusiasm if and when the first silver ETF begins trading.
       PGMs - While watching paint dry was more exciting than watching platinum and palladium for most of 2005, the PGMs began to garnish some attention thanks to two key factors:
       The forecast that platinum supplies were going to overtake demand once again failed to materialize. Growing demand for diesel auto catalysts is expected to push the platinum market into deficit for a seventh-consecutive year, according to Johnson Matthey, the precious metals group. However, I suspect that automakers are going to look at palladium more as a cheaper alternative, especially if and when platinum rises above $1,000.
        After skyrocketing and then plummeting, palladium finally became so oversold at a time when fundamentals began to look bullish again. It's important to note that demand for palladium jewelry has risen at the expense of platinum jewelry demand.
       I like palladium (its role as poor cousin to platinum is ending) over platinum and think the spread between both will narrow in 2006 and eventually we can see less than $500 between them.
       Base Metals - I believe the United States and some other key economies worldwide are entering a period of economic slowdown or even recession. While many base metals have good supply versus demand scenarios, I do think base metals can be more affected by this perceived slowdown than precious metals. I'm especially concerned about a big meltdown in copper as we get into 2006. This doesn't mean you sell anything base metals-related, but if you find yourself over-weighted you may want to lessen your exposure. This also doesn't mean that a copper producer isn't a worthy purchase because we're likely to see $1.75 or even $1.50 again. Again, it just means the current one-way street in copper has two-way traffic straight ahead.
       Uranium - Up until recently, it appeared that "Pet Rocks" had more of a chance of coming back than nuclear plants. Now, Finland is planning the first nuclear plant in Europe since 1991. France, which already has 58 plants, plans on building another 30 more. China says it plans on spending $50 billion on atomic energy construction by 2020. Even the good 'ole USA has seen over a dozen companies speak again of building new plants. And despite these facts and an energy crisis clearly in our future, you hardly hear anyone outside of those involved with a junior resource uranium stock speaking of one of the most bullish fundamental plays in all areas of the financial world- uranium. I said back in 2003 and again in 2004 and 2005 it was, in my opinion, the most likely metal to rise. That's no different for 2006.
       Mining and Exploration Shares - Going back to my days as a broker in the 80s and 90s, I cringe when I hear people state owning gold stocks was like owning gold. I respond to this falsehood by noting how on Black Monday, 1987, gold rose $11.80 and 6 or so of the 10 or so only stocks up on the New York Stock Exchange that day were gold stocks. The next day, gold lost about $10 and was still up for the two days, yet mining shares lost about half their value. Why? Because people cared little that they mined gold and needed to raise liquidity.
       2005 was a year when most mining shares underperformed the underlying metal or metals they mine while junior exploration shares performed even worse. Why? I believe my comments from http://www.grandich.com/docs/res_world_09-05.pdf are still relevant today. The difference now is that we broke above $500 and I stated throughout 2003 through 2005, we would need to get comfortably above that price before enough sustained media and investor interest would finally make most boats rise. We're at that threshold now.
       Oil - I continue to believe my head for the exits called in August during the spike to $70 should prove to be the cyclical top. We're correcting a very oversold condition and support around $57 held as expected the first time around. I believe we're now in a broad trading range of $55-$65, but if I'm right about an economic slowdown unfolding, the danger is a sub-$50 price versus breaking above $70. Hurricane season and war rattling are always potential spike factors.
       U.S. Dollar Index - While an argument can be made that the U.S. Dollar Index has made a bottom technically, my interpretation is it must get above 95 in order to reverse its downtrend from the 120 area. This time last year, people were tripping over themselves to declare the dollar dead. In addition, the U.S. government for 2005 only, allowed U.S. corporations to repatriate dollars that were overseas and this combined with the Fed's raising of interest rates allowed IMHO a counter-trend rally to occur. I'm looking for the neckline above 92 to hold and a resumption of the downtrend in the second half of 2006 to take place.
       Iraq, Iran and the Middle East - I try to do my best to leave out my personal views when trying to form objective observations for my readers. I will admit I had an internal battle before my country entered Iraq. While very much a Christian conservative who believes the blueprint for life is Jesus' Sermon on the Mount (message: love our enemies), I also appreciated the belief by those who felt Saddam Hussein must be removed from power. The fear was whether he had weapons of mass destruction at the time, which I suspect he did but they're in Syria now and/or destroyed. Even if he didn't, I believed, like many, that he would eventually acquire them and we all would face a very serious problem.
       We can debate this through hindsight until we're all blue in the face, but I can tell you that Iraq, IMHO, is going to be just the opening act to a showdown likely to come to a head in 2006. The bigger issue will likely be Iran and its drive for nuclear weapons. In fact, I believe Iran can become one of the big news stories in 2006 and the foreseeable future.
       Iran's new President, Mahmoud Ahmadinejad, is purging government institutions up and down the ladder in what "The Guardian" U.K. newspaper called "a coup d'etat." Throw in his call for wiping Israel off the map, reports that members of Al Qaeda are roaming freely in Tehran and living in homes belonging to Iran's Revolutionary Guards (according to a German monthly magazine) and a small matter regarding a nuclear bomb, and I believe both Iran and Iraq will become flash points and underpin gold. Israel has become very vocal and has vowed not to allow Iran to have a nuclear bomb. Former Israel Prime Minister Benjamin Netanyahu openly called for a pre-emptive strike against Iran's nuclear program. London's Sunday Times reported that Israel's prime Minster Ariel Sharon has given orders to be ready by the end of March for possible strikes on secret uranium enrichment sites in Iran. The German newspaper Der Tagesspiegel said on December 31st that the United States government has begun coordinating plans with NATO for a possible military attack against Iran. And to top it all off, The London-based Jane's Defence Weekly has reported that Iran and Syria signed a strategic accord that pledges Syria will store Iranian nuclear weapons and missiles.
        Editor's Note: Peter Grandich publishes The Grandich Letter which provides commentary on the mining and metals markets. Bull & Bear readers can receive a FREE subscription by signing up on www.Grandich.com.

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LIBERTY'S OUTLOOK
300 Frandor Ave., Lansing, MI 48912.
Monthly, 1 year, $79.

Major U.S. coinage changes coming soon

       Patrick Heller: "Several months ago, I previewed pending legislation for changes in U.S. coinage.
        The legislation, with modifications, passed Congress and was signed into law by President George W. Bush on December 22. It is now Public Law 109-145. It was signed at the same time as Public Law 109-146 which call for a commemorative silver dollar for the golden anniversary of the end of public school segregation in Little Rock, Arkansas.
        The new law brings several changes to U.S. coinage, including design elements on the edge of several coins, which I list in roughly chronological order:

• By the end of June 2006, the U.S. Mint is to begin issuing a 1 Ounce .9999 fine $50.00 gold bullion coin with virtually an identical design to the original 1913 Indian Head or "Buffalo" Nickel. The Mint is required to strike these coins only from gold obtained from natural deposits within the United States and must be used within one year or when it was mined. These coins will be sold with a protective covering to prevent damage from handling the soft pure gold coins.
• Beginning in 2007, the U.S. Mint will issue a series of circulating U.S. President Dollars. They will be issued at the rate of four coins per year, in chronological order of holding office. Grover Cleveland, who served two non-consecutive terms, will appear twice on coins issued in 2012. Past presidents must be dead at least two years before they would be allowed to appear on a coin. The earliest that any currently living presidents - Ford and Carter - could appear on a coin is in 2016, assuming that they died by 2014. In a major change of coin design, the edges of the coins will have incuse inscriptions of the year of issue, E PLURIBUS UNUM and IN GOD WE TRUST! Further, since an image of the Statue of Liberty will appear on the reverse of each coin, the word LIBERTY will not appear anywhere on the coin, only the fourth exception to this requirement contained in a 1792 law and the first since 1883.
• In conjunction with the Presidential dollar coins, the Mint will be required to strike Sacagawea dollars in the amount equal to at least one-third of the mintage of the presidential coins struck each year.
• At the same time that each Presidential dollar is issued, the Mint will issue a $10.00 non-circulating half ounce .9999 fine gold coin honoring the corresponding First Lady. The obverse of the coin will have the name and portrait of the first spouse, the dates of the president's service, and the president's order of service. The reverse is to have images reflective of the life and work of the first spouse, the $10 denomination, and UNITED STATES OF AMERICA.
• The U.S. Mint is to issue four different Lincoln cents into circulation in 2009, one each quarter, to honor the Bicentennial of Lincoln's birth and the Centennial of the Lincoln cent. While the obverse will be unchanged, there will be a sequence of four reverses honoring the major periods of Lincoln's life: his birth and early childhood in Kentucky, his formative years in Indiana, his professional life in Illinois, and his presidency in Washington, DC. Also in 2009, the mint will be required to produced a collector version of the 2009 Lincoln cent containing the identical alloy of 95% copper and 5% zinc and tin as used in the 1909 issues.
• In 2010 and beyond, the reverse of the Lincoln cent will be changed to a design "emblematic of President Abraham Lincoln's preservation of the United States as a single and united country."

The introduction of these new coins will have several ramifications to bullion investors and rare coin collectors. Here's what I expect to happen:
        1) Since pure gold bullion coins have proven far more popular around the world than alloyed coins such as the American Eagles, I would expect an expansion of the Buffalo series to include smaller gold coins of half, quarter, and tenth ounce size.
        2) With a few years, I think the Mint will stop producing American Eagle gold bullion coins, though they may continue striking Proof issues. If this happens, I expect premiums for gold American Eagles to drop significantly as happened with the Austria 100 Coronas, Mexico 50 Pesos, and South Africa Krugerrands.
        3) The Presidential Dollar coins will spark increased collector interest in past U.S. dollar series. I expect prices of Mint State Morgan and Peace dollars to soar. This will likely start happening by the second half of 2006 as smart collectors try to beat the rush.
        4) Along with the other changes, I expect another spark of interest in coin collecting like we saw from the introduction of the State Quarter series in 1999 and the Sacagawea dollars in 2000.
        5) The Mint will be striking so many Sacagawea dollars that they will have to resume issuing them into circulation, which has not been done since 2001.
        6) The U.S. Treasury will finally join other countries and discontinue the issue of $1.00 notes by around 2015.
        7) Last, I predict that the Mint will cease striking the one cent denomination sometime around 2015.
        Gold bullion and rare coins should be very interesting, providing substantial profit opportunities to those who make their acquisitions ahead of the crowd."

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INTERINVEST REVIEW & OUTLOOK
P.O. Box 51462, Boston, MA 02205.
Monthly, 1 year, $125.

Time for a pullback

       Dr. Hans Black: "Suddenly the world seems to be paying attention to the price of gold, and with the price trading in the resistance band between $520 and $550, we once again believe it is time for a pullback, possibly into the $450-$470 zone over the next six months. Certain gold stock, which have been literally red hot in recent weeks, might also pull back and thus give an opportunity for some profit taking. The bigger picture remains solidly bullish for gold and pullbacks may be narrower than we anticipate. However, we will make that decision once prices dictate.
        As mentioned above, many gold stocks have reached prices we see as short-term excessive. We would thus counsel no further buying and selective profit taking in our favorite names. Long-term, we still favor Newmont, Eldorado, Cambior, and Southwestern Resources."

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Harloff's THE INTELLIGENT FUND INVESTOR
815 Crocker Rd., D-10, Westlake, OH 44145.
Monthly, 1 year, $179.

Gold, Energy, Latin America, • By the end of June 2006, the U.S. Mint is to begin issuing a 1 Ounce .9999 fine $50.00 gold bullion coin with virtually an identical design to the original 1913 Indian Head or "Buffalo" Nickel. The Mint is required to strike these coins only from gold obtained from natural deposits within the United States and must be used within one year or when it was mined. These coins will be sold with a protective covering to prevent damage from handling the soft pure gold coins.
• Beginning in 2007, the U.S. Mint will issue a series of circulating U.S. President Dollars. They will be issued at the rate of four coins per year, in chronological order of holding office. Grover Cleveland, who served two non-consecutive terms, will appear twice on coins issued in 2012. Past presidents must be dead at least two years before they would be allowed to appear on a coin. The earliest that any currently living presidents - Ford and Carter - could appear on a coin is in 2016, assuming that they died by 2014. In a major change of coin design, the edges of the coins will have incuse inscriptions of the year of issue, E PLURIBUS UNUM and IN GOD WE TRUST! Further, since an image of the Statue of Liberty will appear on the reverse of each coin, the word LIBERTY will not appear anywhere on the coin, only the fourth exception to this requirement contained in a 1792 law and the first since 1883.
• In conjunction with the Presidential dollar coins, the Mint will be required to strike Sacagawea dollars in the amount equal to at least one-third of the mintage of the presidential coins struck each year.
• At the same time that each Presidential dollar is issued, the Mint will issue a $10.00 non-circulating half ounce .9999 fine gold coin honoring the corresponding First Lady. The obverse of the coin will have the name and portrait of the first spouse, the dates of the president's service, and the president's order of service. The reverse is to have images reflective of the life and work of the first spouse, the $10 denomination, and UNITED STATES OF AMERICA.
• The U.S. Mint is to issue four different Lincoln cents into circulation in 2009, one each quarter, to honor the Bicentennial of Lincoln's birth and the Centennial of the Lincoln cent. While the obverse will be unchanged, there will be a sequence of four reverses honoring the major periods of Lincoln's life: his birth and early childhood in Kentucky, his formative years in Indiana, his professional life in Illinois, and his presidency in Washington, DC. Also in 2009, the mint will be required to produced a collector version of the 2009 Lincoln cent containing the identical alloy of 95% copper and 5% zinc and tin as used in the 1909 issues.
• In 2010 and beyond, the reverse of the Lincoln cent will be changed to a design "emblematic of President Abraham Lincoln's preservation of the United States as a single and united country."
The introduction of these new coins will have several ramifications to bullion investors and rare coin collectors. Here's what I expect to happen:
1) Since pure gold bullion coins have proven far more popular around the world than alloyed coins such as the American Eagles, I would expect an expansion of the Buffalo series to include smaller gold coins of half, quarter, and tenth ounce size.
2) With a few years, I think the Mint will stop producing American Eagle gold bullion coins, though they may continue striking Proof issues. If this happens, I expect premiums for gold American Eagles to drop significantly as happened with the Austria 100 Coronas, Mexico 50 Pesos, and South Africa Krugerrands.
3) The Presidential Dollar coins will spark increased collector interest in past U.S. dollar series. I expect prices of Mint State Morgan and Peace dollars to soar. This will likely start happening by the second half of 2006 as smart collectors try to beat the rush.
4) Along with the other changes, I expect another spark of interest in coin collecting like we saw from the introduction of the State Quarter series in 1999 and the Sacagawea dollars in 2000.
5) The Mint will be striking so many Sacagawea dollars that they will have to resume issuing them into circulation, which has not been done since 2001.
6) The U.S. Treasury will finally join other countries and discontinue the issue of $1.00 notes by around 2015.
7) Last, I predict that the Mint will cease striking the one cent denomination sometime around 2015.
Gold bullion and rare coins should be very interesting, providing substantial profit opportunities to those who make their acquisitions ahead of the crowd."
***************

and Tech Opportunities

        Dr. Gary Harloff: "The investment theme today is the same one we have had most of last year. Commodities, foreign markets, and technology are the investment opportunities...still. Yields on US 10 and 30 year interest rates are dropping along with the US dollar vs. other currencies. These drops foreshadow a further slowing of the US economy in 2006. We recently attended an institutional hedge fund meeting in California. Most Hedge funds returned about 4% to 6% last year. What surprised us was that The California Public Employees' Retirement System (CalPERS), is investing in the construction and sale of residential homes in Latin America. Many are investing overseas to capture growth that is so illusive in the US. Good international investment opportunities are evident in our HVI rank, viz. Japan, Latin America, Emerging Markets, and Europe. Also thriving are oil, gold, and semiconductors.
        Overseas heavy industry expansion is growing, and is the reason for commodity price increases, especially in China and India. For the time being our technology is in demand. But, with China and India producing more engineers and scientists, and the US support for basic research diminishing, we wonder how long the US will lead in this technology age. 1984 is not yet here.
        We remain on a buy for the S&P 500, NDX and for Precious Metals. Our bond yield model is on a sell indicating that large institutional and foreign investors are buying bonds. Financial stocks are to be avoided. In the "style box", value and small beat large cap growth by a small amount. We don't see a bear market yet since large cap growth will lead for several months before the next bear market starts."

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Russ Kaplan's HEARTLAND ADVISER
5002 Dodge St., Ste. 302, Omaha, NE 68132.
Monthly, 1 year, $150.

Conoco Phillips
Short-term overreaction

        Russ Kaplan: "A new recommendation for our model portfolio is Conoco Phillips (NYSE COP). Recently it has been down sharply mainly because the company has announced plans to purchase Burlington Resources, a natural gas company.
        We believe it is down for short-term reasons. There are the usual arguments about paying too much for the company and problems of integration. While this may be true, the long term presents Conoco Phillips with a very large presence in the natural gas market - which we think is bound to be profitable. Also, most of Burlington Resources' natural gas assets are in the United States, so there will not be the problem of dealing with unstable countries."

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ECONOMIC ADVICE
3910 NE 26th Ave., Lighthouse Point, FL 33064.
Monthly, 1 year, $129.

Letter from Rob McEwen

        James Rapholz: "I'm going to quote a letter that I received a few days back only because the author has such a terrific record at making money for his shareholders. Remember - as I've pointed out time and time again - always follow the guy who has already won - not the wannabee winners - this McEwen fellow is a proven winner at making money in precious metals mining:
        Dear Investor,
        "Thank you for being a believer and follower of Goldcorp! Since I started restructuring Goldcorp in the early 1990's, the market value has increased from $50 million to $6.8 billion. It has been some ride! However, I wanted to keep you informed of my latest development, assuming the position of Chairman and CEO of US Gold.
        On July 29, 2005 it was announced that I had purchased 33% of the shares of the company, becoming the largest shareholder of US Gold. Shortly thereafter, I assumed the position of Chairman & CEO. I feel it's important for any CEO of a publicly traded company to have a large vested interest and to have his or her interest directly aligned with the shareholders. My interest is the same as yours: Increasing shareholder value!
        When I looked at US Gold I saw a very unique and interesting opportunity! A small company with one of the largest land packages, in the Cortez Trend. If you look at our property on the map, it is surrounded by opportunity. Just to the north sits Placer Dome's Cortez Hills discovery, which has been reported to contain 5.6 million ounces of gold and was recently approved for production. This discovery changed the outlook for the Cortez Trend, because it suggests the same style of deposit is present, which resides in the Carlin Trend.
        The Carlin Trend is adjacent and parallel to the Cortez Trend. To date the Carlin Trend has mined over 60 million ounces of gold. Within the Carline Trend, gold deposits seem to be strung together in clusters, almost running into each other. Early indications suggest a similar pattern may exist on the Cortez Trend.
        US Gold's Tonkin Springs property has undergone several exploration programs throughout the past 20 years. However, most of the drilling centered on a few select areas, leaving the large majority of the property untested. In addition, the drilling was close to surface. So why is this important? It indicates that exploration was not focused on finding a Carlin style deposit similar to Cortez Hills, which is found deeper in the ground, located in what is referred to as the Lower Plate. This Lower Plate has never been hit on Tonkin Springs property. Nevada Pacific Gold, which holds small blocks of land within Tonkin Springs, announced the discovery of Lower Plate rock on its property. This is a very intriguing development in US Gold's quest for the next Cortez Hills.
        The next step for the company will be to seek a listing on a major American Exchange, continue building the management team, along with the board of directors and, lastly, start aggressive drilling on the property!
        When I stepped down from Goldcorp earlier this year I felt my skills would be better aligned with the needs of a smaller company. I enjoy leading and investing in small exploration companies because a discovery can transform the outlook for an organization overnight. I view exploration as our research and development and to achieve our goals we are going to have to think differently than our competition. To lead the pack we are going to have to take an innovative approach and speed up the game!
        On a final note I wanted to tell you about the new US Gold website at www.usgold.com (where you can request an investor's package) and where you can sign up to receive the latest news on the company and my new website www.robmcewen.com."
        For more information contact Robert R. McEwen, Chairman & Chief Executive Officer, US Gold (USGL/OTCBB/$3.46/12-30-05), Toll Free Phone: (866) 441-0690 or Ian J. Ball, Investor Relations."

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Kenneth Coleman's INVESTMENT TRACKER
4805 Courageous Ln., Carlsbad, CA 92008.
Monthly, 1 year, $139.

Gold is given its head

        Kenneth Coleman: "For the first time in decades, the price of gold (once a harbinger of coming price inflation) was given its head; meaning the price of gold is no longer manipulated. It appears that gold is attempting to tell us something again.
        Conditions that allow the price of gold to break out of its trading range came earlier than usual in 2005, just before interest rates and the dollar moved to their current high levels. Is it possible that gold has once again become a harbinger of things to come? If this is true, what is the price of gold telling us now?
        One educated guess may be the prices (inflation) are not as controlled as the powers that be would like you to believe. That is why, months ahead, I am certain the Fed will be forced to become more aggressive regarding its monetary policy in an attempt to control prices and bring the price of inflation hedges much lower.

China Continues to Renege on Its Promise

        Historically, gold equipped the investor with a safety net against any potential catastrophic monetary event. Prior to 1971, gold had a set value. The only reason investors moved into gold was because they feared the loss of value in paper money (most major currencies at the time were pegged to the value of gold).
        Currently, the euro is losing value while the dollar is rallying. Most gold buying has been coming from Asian countries, particularly by China. Moreover, the Chinese government continues to renege on the promise it made to G7 nations to release the Yuan's peg from the dollar and allow it to float in the free market.
        The Chinese government's excuse for reneging on its promise to reform its monetary policy stems from its claim that its banking system is too fragile to safely allow the Yuan to float freely in the open market at this time. China's defiance may be due to the fact that the Chinese banking system is so fragile it could suffer a monetary collapse from insurmountable pressure on its currency from abroad. There are two ways a Chinese monetary collapse could occur.
        The first scenario is that China, under enormous pressure from trading partners, will agree to allow the Yuan to float freely in the open market. In time, Yuan value will become too pricey to maintain their market share. Chinese banks, already maintaining massive debt (incurred through extreme socialistic management policies of state-owned companies) have, for years, been considered on the verge of default. Thus, any additional strain could push many of these banks to default on their debt and forced into bankruptcy.
        The second scenario portends China's current monetary system (supported by an excessive and inequitable policy) will suffer mounting hostility from abroad. For example, Congress may financially act on its threat to place tariffs on Chinese imports; or a 27.5 percent excise tax on all Chinese goods sold in the U.S. Tariffs would pressure Chinese banks as severely as a free-floating Yuan, if not worse.
        However, there could be one additional scenario. A chart from www.ChartoftheDay.com illustrating the dollar's purchasing power is telling us "a dollar in 1915 is worth about one nickel today."
        A chart similar to the one depicted here was featured in Barron's recently. Likewise, if Barron's is warning of dollar weakness, then it is no wonder investors holding dollars are buying gold.
        Think about it. We have had four failed global monetary systems in the 20th century. We are currently trying to work under a floating value dual reserve global monetary system (which began in July 2002 when the euro became the currency of choice for many European nations).
        I recently spoke in Berkeley, California, to the local chapter of the American Association of Independent Investors. After speaking about the four failed monetary systems and the current dual reserve global monetary system, I left seminar attendees with one final thought. How can anyone be certain that a fiat monetary system (a historically weak and failing concept) could ever work?
        If gold continues to defy political gravity, it could be warning us of a growing global fear that politicians, once again, are not to be trusted in managing the value of our money.

The Four Failed Global Monetary Systems

• 1917 - The Classic Gold System (1875-1917)
• 1929 - Great Britain's Gold Exchange System (1925-1933)
• 1936 - Tripartite Monetary System (failed aborning)
• 1966 & 1969 - U.S. Gold Exchange System (1944-1971)

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DICK DAVIS DIGEST
P.O. Box 8128, Fort Lauderdale, FL 33310.
1 year, 24 issues, $180.

Top Resource Stock Picks

        Each year, editor's of The Dick Davis Digest ask leading investment advisors for their Top Stock of the Year for the coming year. This comprehensive survey features stock picks from various sectors. Below we include those advisors commenting on the resource stocks.

Digging for dollars: Mega Uranium

       James Dines: "In recent years we decided to play the China boom in the energy markets, with particular emphasis on uranium because we expect that to grow exponentially while the world switches to uranium from fossil fuels because of global warming and political uncertainty from suppliers such as Venezuela and Iran - plus the world's oil will be depleted sooner or later. We recommended Cameco in this column a few years ago, and it has gone up by ten times since its low. The Dines Letter has now shifted its focus to the smaller and less-known uranium stocks, one of which is Mega Uranium Ltd. (MGA.V CDNX 4.75) whose interest are in such friendly areas as Australia, Argentina, Canada and Africa. We like the way this company is aggressively acquiring uranium properties worldwide, even including Mongolia and Guinea in West Africa. Mega Uranium should see a number of its acquisitions come to fruition in 2006 and beyond, but with so many prospective properties from which to choose, this could be a big winner. There are only around 42,271,213 shares outstanding (fully diluted) and at its recent price of $6 (Canadian), any big 'find' on any of its many uranium holdings could 'strike it rich' for the company. Actually, we have several of these smaller uraniums in our portfolio, and we recommend buying them as a group, as we are reasonably confident that at least some of them will strike it rich. Most important of all, and confirming our bullish analysis, Mega Uranium Ltd. Is in the type of uptrend that reveals persistent buying." - James Dines, The Dines Letter, P.O. Box 22, Belvedere, CA 94920, 1 year, 17 issues, $195. www.dinesletter.com.

Uranium play: Cameco Corp.

       Harry Schultz: "Cameco Corp. (NYSE CCJ $68.89) is the world's largest, low-cost uranium producer accounting for twenty percent of the world's uranium production. Growing demand for electricity and concern over greenhouse gas emissions are fueling a rediscovery of nuclear as a clean, reliable and affordable source of baseload electricity. However, existing uranium supply is expected to fall short of demand over the next decade (world demand is predicted to outpace existing supply by more than 400 million pounds), demonstrating a need for new primary mine production, which will require higher sustained prices. Cameco is positioned to benefit from this shortfall through their control of more than sixty percent of known new uranium production. Cameco's sales dropped eight percent to 287 million dollars for the period ending September 2005, but earnings were up 126% per share to $0.43 CAD per share. In addition, Cameco has exposure to gold via a majority interest in Centerra Gold, Inc., a growth-oriented Canadian-based gold mining and exploration company engaged in the acquisition, exploration, development and operation of gold properties in Central Asia, the former Soviet Union and other emerging markets. Buy at market or on dips to $55 with a stoploss of $44.90." - Harry Schultz, The International Life Strategies Letter, www.hsletter.com, Swiss fax (41) 21-652-0525, yearly subscription, $377.

Emgold Mining: Should rise dramatically

       Jay Taylor: "Emgold Mining Corporation (EGMCF.PK 0.4295 OTC/EMR 0.40 Toronto Venture) is in possession of one of the most spectacular mother lode gold mines in United States history at Grass Valley, California. Now, as the price of gold is on the rise, prospects for putting this high-grade underground mine back into production is very good. At present, a resource of approximately 1.4 million ounces of gold has been outlined, but based on the geology of this mine, the prospects for hosting a multimillion ounce deposit are very good. But the real news in 2006 that could set Emgold's Mining's shares on fire is its tile manufacturing business. Interestingly, the company acquired a proprietary tile manufacturing technology that is able to use waste rock from the mine, and thus solve a waste disposal problem for the company's gold mining project. Meantime, the economics of the tile manufacturing business look even better than the gold mining project. The price to be received for tile products ranges from $400 to $600 per ton, compared to a manufacturing cost of $150. If a successful start-up during the first half of 2006 takes place, we think that the shares of Emgold Mining should rise dramatically above their 2005 close of US$0.40." - Jay Taylor, J Taylor's Gold & Technology Stocks, www.miningstocks.com, (718) 457-1426, 1 year, $123.

Newmont Mining: A buy at current levels

       Donald Sazdanoff: "Wall Street has been underestimating the strength of the gold market for the past five years and this year is no exception. Demand from the Middle East as those investors recycle their petrodollars, from India with increasing demand for jewelry and most importantly from China as that country begins to develop a gold backed economy and currency, will keep the price of gold moving higher. With the cost of extraction relatively fixed, any increase in the price of gold will fall directly to the bottom line. Investors should take a position in gold via shares in the World's largest mining company Newmont Mining Corporation (NYSE NEM 58.25), which is a buy at current levels." - Donald L. Sazdanoff, The Sovereign Advisor, 1 year, 12 issues, $175, The Sovereign E-Advisor, Weekly, 1 year $120. Both services $250, sazdanoffsovereign@neo.rr.com, (800) 896-1524.

Ivanhoe Mines: Beyond superlatives

       Dr. John Faessel: "Beyond Superlatives - Last summer I visited Ivanhoe Mines, Inc.'s (NYSE IVN 7.70) Mongolian mining properties located sixty miles north of China. Ivanhoe Mining has 100% mining rights to the second largest copper deposit in the world (audited by prestigious AMEC Americas Limited) and it is still growing as test drilling has yet to find the limits of it. The company has $140 billion of copper and gold based on today's prices and it is strategically located on the doorstep of the world's largest consumer of copper and coal - China. I also visited the massive copper smelter near the border in Boutau, China. Ivanhoe's market capitalization is only $2.2 billion and it is trading at a minuscule 1.5% of their audited gross metal value. Just thirty miles north of China is Ivanhoe's enormous and super-rich-in-quality coal deposit that stretches ninety miles. Giant Cap Research bought sixteen percent of Ivanhoe's shares last year. Fidelity and Templeton are also major shareholders. On December 30, 2005, Standard & Poor's ratings services revised its outlook on the long-term ratings on Ivanhoe Mines to positive from stable. The supply/demand/valuation/stock-price metrics look dazzling to me. Mongolia is a safe, democratic And Buddhist country. The project is being engineered and is also being overseen by John Macken, Ivanhoe's president, who built out Grasberg, the 'largest ever' mine in Indonesia." - Dr. John Faessel, On The Market, Dr.faessel@onthemar.com, 20533 Biscayne Blvd., #4-323, Aventura, FL 33180, (561) 222-8332, $90 per quarter, $320, 1 year subscription, Bi-weekly E-mail report.

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