Indeed, it’s been a spectacular year for precious metals.

Silver prices doubled off their lows.  Gold spiked to a new all-time record.  And platinum tacked on more than $500 an ounce.

However, in the past month the rally in gold, silver, and platinum has stalled, begging the question: Is this a momentary pause before another leg-up?  Or has the all the gas in the tank been burned?

As I’ve stated before, I think the fundamentals are very strongly aligned with the former - that this is a temporary “profit-taking” dip and that twelve months down the road precious metals prices will be higher than they are today.

Of course, this isn’t the view of the mainstream media...

They’ll tell you that the economy is rebounding and this is strengthening the US dollar, which is bad news for precious metals.

What’s their case?  It’s that real estate is rebounding and unemployment is falling, and thus the groundwork for an economic recovery is being laid.

I disagree.

Before you buy in to this whole economic rebound, you might want to take a second to look at the fine print. You’ll quickly see that not everything is rosy:

• The S&P Case Shiller home price index shows that the recent rise in home prices have stalled in October.  Chairman of the Index Committee at Standard & Poor’s says “Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip… housing starts remain weak, fears that the market will be swamped by a wave of foreclosures are heard and government programs aimed at the housing market will expire in the first half of 2010.”

That doesn’t exactly sound like a very healthy housing market if you ask me. Certainly not something worthy of supporting sustainable economic growth.  And then there’s this...

• The U.S. economy continues to shed jobs.  Although the unemployment rate shrank 0.2% in November, the latest data shows the economy actually lost 11,000 jobs last month.

And if you dig deeper into the data, you’ll find very little to cheer about on the jobs front.

• The number of long-term unemployed (those jobless for 27 weeks and over) rose by 293,000 to 5.9 million.  The number of discouraged workers increased to 861,000, up from 608,000 a year earlier.  And job losses in construction and manufacturing industry increased by 68,000.

So when you hear the mainstream media calling for the price of precious metals like gold to fall because the economy is recovering, make sure you read the fine print.

And remember, the fundamentals of gold remain very strong.  Central banks are purchasing gold in record amounts, the U.S. dollar remains as weak as ever, and with the US money supply increasing dramatically over the past two years, inflation is inevitable .

If you’re going to make one resolution this year, it should be to ride the gold bull in 2010.

Yours in profits,

Roger Gaines
Editor, Resource Stock Advisor