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INDUSTRY BULLETIN - GOLD SECTOR: GOLD CONSOLIDATING

Dear Shareholder,

In our ongoing efforts to provide broader communications and market information, we are pleased to provide you, for your interest, with Industry Sector Bulletins discussing current market opinions, trends and/or conditions that could affect the price, use and supply & demand for gold

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AGORA Investor Relations

FROM: Kitco.com

February 13, 2006

Gold`s Correction: How Should We React? 2/13/06

By Adrian Day

February 13, 2006

(For the full article, click on the link provided below)

http://www.kitcocasey.com/displayArticle.php?id=547

After gold’s dramatic fall last week, followed by recovery and then further decline, investors are asking whether they should run to the exits to ensure they lock in some profit, or move up to the plate.

Whatever the trigger to the recent drop in gold, it was set for a correction. With the Bullish Consensus over 90%--a stunningly near-universal one-sidedness. This came after a particularly sharp run-up without pause. John Doody of Gold Stock Analyst recently calculated how long it had taken gold to move up each $50 from $250. The first five $50 moves, to $500, had each occurred over an uncannily similar 212-240 days. The move from $500 took just 17 days.

Markets simply don’t move up in a straight line and we all know this, and a contrarian instinct would give pause. Perhaps the buyers were exhausted. As often happens in overextended markets, when the price starts to decline. It can fall rapidly, as stops are hit and recent buys panic while others lock in remaining profits. This is normal market action, and the selling trigger can sometimes be minor or unimportant.

What now?

We should not expect gold to recover all its losses as quickly; markets rarely do. We saw a typical 50% retracement from the peak, before gold fell again. We should expect some follow through on the downside; gold is still trading above its 50-day moving average, which would give it another $10-$15 downside to the low $530s. That seems to be the downside risk to me, and even that may not be reached. At minimum, though, we should not expect gold to rebound above previous highs immediately.

But this is all short-term prognostication. Fundamentally, we expect the correction to be brief and shallow. In the context of this bull market, another $15 a few weeks is but a blip on the graph. With strong Indian and Mid East buying, gold could start to firm sooner than we think.

Get ready to buy, but be patient

As for the stocks, they are not particularly expensive relative to bullion, so we don’t expect a panic rout, although we do expect some follow through, particularly if gold fails to bounce convincingly. It’s still too soon to buy aggressively, and we suspect we’re not the only ones feeling the same.

So the next week or so may tell the story: how strong Asian and Mid East buying? How firm support? Who is selling? Answers to those questions will tell us whether latecomers should be aggressive adding to positions.

Existing gold stock holders for the most part are still holding very good profits; some are now wondering whether they should take profits now to avoid further declines. At the same time, investors wishing they had purchased earlier are considering jumping on board now. Let me try to answer these issues by making a few points. Let’s keep it simple.

How high?

First: gold is in a long-term uptrend, and we have only recently entered the second major leg of this bull market. The global monetary situation (think rising inflation and a lower dollar) and geopolitical situation (think Iran and Hamas) have certainly not improved of late. An analyst with the French bank Credit Agricole recently raised his “mid-cycle estimate” to $900, with “the possibility of a spike to $2,000 or higher”.

Second: this second leg up is more firmly based than the rise in gold from early 2001, when gold was largely the “anti-dollar”. Now gold is moving up in all currencies; and there has been a fundamental change in sentiment where negative news (for gold) is largely ignored.

Third: gold remains fundamental undervalued, relative to its long-term real (inflation-adjusted) price; to the money supply; to stocks; to oil…on any number of comparisons.

Fourth: notwithstanding this, gold is still overextended on a short-term basis.

Fifth: the correction will likely be relatively shallow and short-lived, given the strong physical buying from several markets (especially India and the Middle East), where buyers have quickly adjusted to higher prices.

Sixth: despite the strong recent performance the stocks of the senior producers, they are still, as a group, selling right around long-term average valuation measures. They are not particularly expensive, especially on an asset basis.

Adrian Day is president of Adrian Day Asset Management, which offers discretionary money management services to individuals and small institutions in both broad global accounts and dedicated gold accounts. For information, call 410-224-2037 or visit the firm’s web site at www.AdrianDay. He is also editor of a premium advisory service, Global Analyst.

www.AdrianDayAssetManagement.com

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“The gold fell sharply last week to close at $551/oz, down 3.1% on what was largely a speculative fund liquidation”……Cannacord.