Hi Tau!

I think we are a long way from the housing bottom yet. The job losses have not peaked yet, and when they do, add another 3 months for the mortgages to go into default, and then another 3 months for the foreclosure process to wind through. So my guess is that we have seen only the first wave of mortgage defaults, and a lot more downside is yet to come. The FED can throw money at the problem, but keep in mind that a lot of property was bought by people with good credit who can afford the payments. They are walking away from homes because the equity has gone negative. So money is not necessarily going to fix it all. If more people are losing jobs and cannot afford their homes, then the foreclosure cycle will continue, the supply of cheap homes will continue to depress the market value, and the equity will still go down.

I think the gold sector has already bottomed. Much of the gold downside was precipitated by a rising dollar and a wave of momentum players throwing cash into what was going up and out of what was going down. Now we will probably see the money flow reverse. The fundamentals for gold continue to get stronger so probably some greater leverage will flow in just from the value crowd. Silver should be even stronger because the gold:silver ratio is way out of line and silver appears to be even more scarce in bullion form.

cheers!

mike