Market Summary —
November 2006

While $59 per barrel oil was the big story in October, the main pressure point affecting precious metal spot prices in November was the weakening U.S. dollar. On mid-month reports that the dollar had lost considerable ground to its major rivals, especially the euro, gold easily pushed past the $620 level, ultimately reaching a twelve-week high near $650. Silver followed gold's ascent, climbing above $13 on November 10 before profit-taking eroded some of its gains. After a volatile performance in October, palladium remained relatively stable throughout November, trading in the $320-$340 range for most of the month. Finally, though platinum spot jumped to a new record high on November 21, eclipsing the $1,400 mark, demand for the white metal quickly cooled, sending it spiraling downward to the $1,170 level. Most analysts attribute platinum's rapid rise to widespread rumors that a new platinum ETF was in the works. On November 21, Barclays Global Investors, Inc., announced that it had no plans to introduce a platinum ETF.

November Gold/Silver Ratio
Beginning the month at just above 49.5, down considerably from October's start near 54, the gold/silver ratio — the quantity of silver (in Troy ounces) required to purchase an ounce of gold — fell to as low as 46.5 in November, following a steady downward pattern. For a graphic view of this trend, you can refer to the chart contained in the sidebar at right.

November Spot Price Summary (U.S. Dollars)
	Silver	Gold	Palladium	Platinum
High	$14.03	$649.20	$343.00	$1412.00
Low	$12.00	$608.50	$317.00	$1088.00
Open	$12.38	$608.55	$325.00	$1090.00
Close	$14.01	$648.40	$331.00	$1181.00

Current Metals Pricing>>

CONTENTS

	Market Summary - November 2006
	Ross Hansen: New Dollar Woes Spur Gold Gains
	David Morgan On Silver Investing
	Mark Burgess: Trading The Gold/Silver Ratio
	Precious Metals Worldwide

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CHARTS

The following charts display the daily low and high spot price of each metal for the month of November, 2006. Source: Northwest Territorial Mint spot prices as posted at nwtmintbullion.com.

The following charts display the daily spot price range of each metal for the six months ending November 30, 2006.

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New Dollar Woes Spur Gold Gains
by Ross Hansen

This past month, American consumers turned out in droves on "Black Friday," the Friday following the Thanksgiving holiday in the U.S. Sales increased by 6% over last year and gave retailers reason to be optimistic about the prospects for a robust 2006 holiday shopping season.

But while many American consumers are still spending freely, evidence for some of the stability of the U.S. economy, some analysts have expressed growing concern about the strength of the dollar. They suggest that the rapidly falling dollar may hurt the purchasing power of consumers even before the holiday shopping season is over.

How weak is the dollar? After hitting a 20-month low against the euro in late November, the greenback stabilized briefly, but continued its decline on foreign exchange markets. Wu Xiaoling, deputy governor of the People's Bank of China, expressed concern about the growing depreciation risk of U.S. currency, which certainly did not help the dollar's performance. The deputy governor's comments were considered especially significant since it is estimated that up to 70% of China's foreign currency reserves are held in dollars.

How Does the Falling Dollar Affect Gold?
With the dollar down, many commodities experts are forecasting a significant rise in the market value of gold that could extend well into the new year, as greater numbers of investors seek out gold for its historic stability. In response to the latest news about the dollar's weak performance against the euro, the British pound sterling, and the Chinese yuan, gold spot has climbed to a 12-week high, finishing the month at $648.30.

Though reports about the falling dollar have done much to spark a renewed interest in gold ownership, the news has also generated skepticism among those who see the dollar's decline as a symptom of deeper problems plaguing the U.S. economy. For example, leading analysts have expressed concern about the prospect of oil-driven inflation in the not-too-distant future. Seeming to support this concern, a U.S. government report issued in November showed that the core rate of inflation had grown faster than expected in October, rising 0.2%.

As oil prices rise, bearish sentiment toward the dollar increases, and predictions about looming inflation gain wider currency among market analysts, demand for gold continues to rise, placing steady upward pressure on the gold spot price. Within the past 30 days, the price of gold has risen by more than 5%.

Could Gold Break $700 in 2007?
As in any market, volatility in precious metals certainly exists. Future global economic and political developments are uncertain. But some experts have indicated that the signs of an impending gold boom can be seen right now. First, they've stated that the fear of inflation, even if it outpaces actual inflation growth, is enough to drive up the price of gold, simply based on the idea that gold is a proven hedge against monetary instability. Second, many analysts claim that a host of additional indicators, including quarterly GDP growth, orders for durable goods, and new housing starts, are suggestive of a rough road ahead for the U.S. economy.

Finally, gold watchers have pointed out that the yellow metal pushed past the $640 level during its month-long upswing in November without causing a major sell-off, a sign, at least according to many analysts, that gold could move steadily forward without too much resistance. Whether $700 is the magic number or not, one thing is clear: the gold spot price is definitely responding to pressure from numerous sources. It seems, at least right now, that chief among these is the falling dollar.

Ross B. Hansen
CEO, Northwest Territorial Mint

Ross Hansen is the founder and CEO of Northwest Territorial Mint and has more than 30 years of experience as a precious metals trader and broker.

We at Northwest Territorial Mint are pleased to add precious metals analyst David Morgan as a regular correspondent. His views on investment, metals, and fiat money have made him a favored observer and pundit in all media — television, radio, print, and online. He founded www.silver-investor.com, and publishes The Morgan Report newsletter every month. At www.silver-investor.com, he puts his free-market expertise to use for his audience — and now he's putting that expertise to use for you.

Greetings Readers,

First, Happy Holidays to all. I just returned from two investment conferences — one in London and one in San Francisco. There is very little interest in the silver market in London, and, for practical purposes, no market for physical silver at all. This is because the United Kingdom imposes a 17.5% Value Added Tax on all physical silver purchases. Funny they don't apply this to gold. Is this to discourage buying physical silver? I will let you make up your own mind. There actually is a way to buy silver in England lawfully and not pay the VAT, but it is rather detailed. This topic is covered in detail in a previous issue of my monthly letter titled, "The Morgan Report."

Although silver is my expertise, we do involve close associates in areas such as base metals, copper, molybdenum, nickel, and other natural resources, enabling us to focus on investment opportunities in those areas. However, our main thrust from the start, and one we will maintain to the end, is that all precious metals investors must start on the bedrock of real physical metal. This means silver and gold coins in your own possession. Since you are reading this, it is a pretty safe bet that you already own some and want to continue to build your wealth.

Finally, I get asked often for price forecasts. People love to know what price silver or gold is going to in the future. It is a bit of a fool's game because there are so many opportunities to be wrong, and only one to be correct. But I like games so here goes. First, let me say both silver and gold are going a lot higher — or you might correctly surmise the U.S. dollar is going a lot lower. My forecast is the price of silver will be $18.00 by April 1, 2007.

Until next month,
Get real, buy real,
David Morgan

We highly encourage all of our readers to visit and become familiar with David Morgan's website www.silver-investor.com, the world's leading source for serious investors. Add yourself to his free e-mail list. The first thing you will receive — for free — is the "Ten Rules of Silver Investing," written several years ago for The Global-Investor Book of Investing Rules: Invaluable Advice from 150 Master Investors, published in the United Kingdom. These rules are pithy, timeless, and will pay big dividends to new investors and seasoned professionals alike. You can opt out of the list at any time, but we doubt you will. Being on his list is a way to be certain you can closely follow the silver story and big economic picture.

Trading the Gold/Silver Ratio
by Mark Burgess

In previous articles published in this newsletter, I have explained how an understanding of the gold/silver ratio — the quantity of silver (in Troy ounces) required to buy a single ounce of gold — can be an effective tool in trading precious metals.

If you read last month's article, you might recall a chart that depicted the fluctuation of the gold/silver ratio over the past 200-plus years. The ratio persisted in the 15-30 range for well over a century (1792-1932), peaked at 133 in 1933, and now sits at its current level near 50.

By taking advantage of the shifts in the gold/silver ratio, investors can realize investment returns without relinquishing control of the precious metals they have purchased.

But how exactly does this investment strategy work?

My goal is to communicate three basic ideas through simple examples. First, I will demonstrate just how easy it is to comprehend and quickly apply the gold/silver ratio trading method. Second, I will reveal its reciprocal nature — that is to say, how trading silver for gold can be as effective as trading gold for silver. Finally, I will show how the prevailing emphasis on the "paper dollar" price of precious metals can be misleading, resulting in missed opportunities for real gain.

Trading Silver for Gold
The key to understanding how the gold/silver ratio works is to realize that this number changes constantly depending on current market conditions. The current ratio is hovering just below 50, after steadily declining throughout November. But for the purpose of demonstration, we will use the round number 50.

Using this number, it would take 50 ounces of silver to buy one ounce of gold. An investor could decide that the time was right to exploit the relatively low gold/silver ratio of 50, trading his 50 ounces of silver for one ounce of gold. Or, he could decide to wait and hold out for the ratio to decline below 50.

If the ratio were to decline to 35, the investor could exchange 35 of his original sum of 50 ounces of silver for one ounce of gold. In this scenario, he would still retain 15 ounces of silver in addition to his new gold investment.

Trading Gold for Silver
With the gold/silver ratio at 35, an investor holding gold could decide to trade his gold for silver, perhaps planning for an expected drop in the ratio to some lower number. Or, he could wait for the ratio to rise. If the ratio did rise to 50, he could trade his single ounce of gold for 50 ounces of silver. If the ratio were to fall again to 35, he could then convert 35 ounces from his silver holdings into an ounce of gold, keeping 15 ounces of silver.

Putting the "Paper Dollar Price" In Perspective
As I mentioned earlier in this article, embracing the gold/silver ratio trading method means abandoning a fixation on the paper dollar price of precious metals. While the respective dollar prices of gold and silver drive the gold/silver ratio, some investors have gotten in the habit of placing too much emphasis on daily spot price fluctuations, buying or selling precious metals based purely on pre-determined target numbers or ranges. By realizing the power and flexibility offered by the gold/silver ratio approach, investors can benefit from a longer-term strategy that emphasizes physical ownership of precious metals over the dollar value of their holdings.

Mark Burgess has been an active trader of precious metals for over 30 years.

Precious Metals Worldwide
News & Trends from Around the Globe

World Gold Supply Down 17% in First-Half of 2006
Analysts cite lower mine production worldwide during the first half of 2006 as the primary reason for the 17% one-year decline in the global gold supply. In its October Gold Investment Digest, the World Gold Council (WGC) reported that the lower yield numbers to date are a result of underinvestment in the industry and higher production costs.

Silver Makes New Inroads Into Apparel Industry
Silver's germ-killing properties have been known for some time. But, now a handful of companies are capitalizing on silver's effectiveness in neutralizing odor-causing bacteria. One such company, Pennsylvania-based Noble Biomaterials, has produced silver-coated textiles for soldiers and high-performance athletes, designed to keep clothes smelling clean and fresh, even after multiple uses without washing. According to leading market analysts and commodities experts, this new technology could lead to noticeably stronger demand for silver once it becomes more mainstream.

South Korea Pledges Major Investment In Fuel Cell Technology
The South Korean government announced recently that it plans to spend more than 48 billion won ($51 million) over the next two years to advance the development of cars and buses that run on hydrogen fuel cells. Seoul will work directly with the South Korean auto manufacturer Hyundai-Kia to realize this objective. Fuel cell technology relies heavily on the use of platinum, which converts hydrogen and oxygen to heat, water, and electricity.