Gold futures are on a tear this morning. December Gold traded at $1012.40 per ounce then fell back to $995.20 (prices as of 11:00 EDT). December silver reached an eleven month high, trading at $17.015 per ounce, then falling back to $16.145 per ounce. The other precious metals also traded higher. October platinum traded at $1278.90 per ounce up $30.10 and December palladium was trading at $293.00 per ounce, up $4.35.

The main culprit was a weaker US dollar. The December US dollar traded at $76.715 down .275. The dollar has declined steadily for six consecutive days.

"Gold and silver have taken the limelight," says Mary Anne and Pamela Aden, adding "Gold looks ready for take off and silver is poised to outperform gold."

In addition, Doug Fabian is a fan of silver. In Making Money, he suggests, "When inflation threatens, silver offers a safe haven; even when inflation worries subside, silver still retains appeal due to its many uses."

We begin with the Adens; in their The Aden Forecast, they explain, "Technically, gold's 'C rise' is off and running and the triangle it's formed has clearly broken to the upside, with gold recently closing at a three month high today.

Is there a big commodities rally underway? Let's look at the numbers:

• The Commodity Research Bureau index (CRB) of 19 energy, metal and agricultural prices gained 14%, the most since 1974
• Gasoline soared 30% in May
• Gold and copper also surged
• Corn and soybeans reached their highest levels since last September
• Crude oil has jumped 29%, the most since 1999
• Gasoline futures for June delivery surged 31%, the most since 2006
• Cotton futures were up
• Gold is at $980.00 per ounce
• Silver posted the biggest monthly gain in 22 years

So you are probably asking: What is fueling this rally?

Rampant inflation seems likely at some point in the future, as demand for commodities increases and the pain of running the government's printing press full time comes back to haunt us. So once again I am revisiting Anglo American ADR (NASDAQ: AAUK).

How can you protect yourself against the pain of inflation? One thing to remember is that although cash is king -- as we are told every day -- cash will not perform well in a highly inflationary environment. What usually performs well are things that you can hold in your hand, that you can touch and that other folks want.

Now that I want to buy things, what kind of things do I want to buy? How will I know what things to buy? Where will I put these things? What if I buy the wrong things?

From my perspective the answer to all of these questions can be found in AAUK, which I most recently wrote about five weeks ago Chasing Value: Anglo American on sale.

Since the company has mining operations on six continents and owns reserves in most every natural resource, precious and not, you will be diversified geographically and in breadth of resources -- things, that is, things people want.

Usually, my Bloggingstocks posts go under the general heading of "Going down in flames," and my basic beat is stocks that you absolutely DON'T want to invest in. That having been said, under the current circumstances, I've decided to cool down the rhetoric. After all, when commentators are yelling about a financial holocaust, armageddon, "blood on the trading floor," and so forth, it just doesn't seem like a good idea to fan the flames.

Although, in the interests of total disclosure, I should point out that my wife, who works down the street from the Stock Exchange, DID recently see the four horsemen of the apocalypse sipping coffee beverages in a Starbucks. Famine, ironically, was wolfing down coffee cake like Michael Phelps on weed.

At any rate, the last few days has witnessed people running for safe bets like oil, gold, and silver. This makes a lot of sense; when things get tough, people want to put their money into things that they can see and feel. Gold feels solid, as does silver, and oil isn't likely to drop anytime soon. Like people hoarding diamonds in times of turmoil, commodities just seem really secure.

Oil continued its month-long decline Friday, as investors and traders reduced their stakes in the world's most vital commodity on concerns slower global growth will slow demand for commodities and raw materials.

Oil fell $3.62 to $116.40 in mid-day Friday trading. Other major commodities also declined. Gold fell $18.30 to $859.60 per ounce, silver fell 87 cents to $15.38 per ounce, and copper declined $223 to $7,442 per metric ton.

The other major energy commodities also fell Friday. Unleaded gasoline fell 8 cents to $2.92 per gallon, heating oil declined about 10 cents to $3.13 per gallon, and natural gas dropped 19 cents to $8.37 per million BTUs.

Likely slower global GDP growth weighs on oil

Economist Glen Langan told BloggingStocks Friday two factors are driving oil lower. First, the prospect of slower economic growth will likely slow oil demand growth in emerging markets. Second, a stronger U.S. dollar is reducing the appeal of oil as a currency hedge.

The dollar strengthened about 3 cents versus the euro to $1.5043 and about 2.5 cents versus the British pound to $1.9190 on Friday at mid-day.

"Regarding oil and gasoline we know that demand destruction is occurring in the United States. Now, at least initially, it appears slowing trade and global GDP growth will affect oil demand in emerging markets, as well. If the latter is the case, oil could fall below $100 or even below $90 per barrel," Langan said.

Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models which have a competitive advantage in established markets, preferably with a favorable global trend as a support. And with the above in mind, Agnico-Eagle Mines is worth a look.

Agnico-Eagle Mines (NYSE: AEM) is a Canada-based gold producer with mining operations located in northwestern Quebec, mine construction projects in northwestern Quebec and northern Finland, and exploration and development activities in Canada, Finland, northern Mexico and the western United States.

Analysts like the fact that Agnico produces about 270,000 ounces of gold annually, and has about five million ounces of gold in proved and provable reserves.

Silver Wheaton Corp. (NYSE: SLW) stock is declining today, as silver futures are trading lower by more than 3%. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on SLW.

After hitting a one-year low of $8.83 last March, the stock hit a one-year high of $19.16 in January. This morning, SLW opened at $17.93. So far today the stock has hit a low of $17.12 and a high of $17.93. As of 12:45, SLW is trading at $17.48, down 71 cents (-3.9%). The chart for SLW looks bullish and steady.

For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $22.50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make an 8.7% return in three and a half months as long as SLW is below $22.50 at June expiration. Silver Wheaton would have to rise by more than 29% before we would start to lose money.

SLW hasn't been above $20 at all in the past year and has shown resistance around $18.50 recently. This trade could be risky if the price of silver and other precious metals continues to rise at a meteoric rate, but even if that happens, this position could be protected by resistance SLW might find just above $19, where the stock topped out back in January.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in SLW.

What are the best speculations and investments among metals, miners, and other resource plays? To find out, I turned to 20 of the nation's leading newsletter editors, as well as speakers from the recent New Orleans Conference, a leading forum for resource advisors.

Their current top ideas cover a wide diversity of ideas, from gold and silver, from alumina and copper, to platinum and palladium. These picks cover markets from Chile to China and from Canada to Russia. These ideas also range from large cap, well-established, and diversified companies to small cap, development-stage junior speculations.

Readers should only consider these ideas as a starting place for their own research and should keep in mind the caveat that any stock you buy should only be considered within the framework of your own time horizon and risk parameters. Meanwhile, here are 20 different advisors assessing various aspects of the metals, mining, and resources sectors:

One of my Chasing Value picks is flying high this morning on no company news. Several months ago, I posted Chasing Value: Anglo American (AAUK) - Inflation hedge & more when the stock was $24.65 a share. Today as I write, it is up over almost 19%, reaching an intra-day high of $38.75.

So what gives? That's a big jump, and there must be something going on. So here is the picture as I see it. Yesterday, the Dow closed down 360 points, followed by Asian markets dropping overnight across the board, with the dollar continuing to sink and oil continuing to rise. Then to top it all off, we wake up this morning to Doug McIntyre's BHP Billiton, world's largest miner, offers to buy rival, so mining stocks are in play. Anyone interested in gold? Silly question I know.

Anglo American is not just a precious metals miner. It is a major player in diamonds, coal and paper; plus it is diversified around the world. Just being outside the U.S. makes it a hedge against the dollar. So if it is possible to fly underground -- then AAUK is doing it!

Disclosure: I own shares of AAUK (still eating my own cooking).

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

During a period of persistent demand for minerals/commodities, considering a mining company or two makes a great deal of sense, and among these Southern Peru Copper (NYSE: PCU) is worth an evaluation.

Southern Peru is one of the largest copper mining companies in the world, and also is a large producer of molybdenum, silver and zinc. With operations in Mexico, Peru and Chile, PCU has seen steady demand for its mined products from burgeoning Asia, as well as from buyers in Europe and the Americas.

Further, although period labor strikes have lowered production in the past, PCU has been able to keep production at acceptable levels, and that fact, combined strong demand for copper, along with the company's 44.9 million proven copper reserves, make PCU an inviting play.

The risks? As one might realize, PCU sells a great deal of copper to China, and if China substantially lowers its copper purchases as it started to do so this summer, copper prices would begin to soften, hurting PCU's results. The Reuters F2007/F2008 EPS consensus estimates for PCU are $9.15/$10.24.

The First Call mean rating for PCU is: Hold. (8 firms.) Mean 2007 target: $109.50. (high: $135, low: $59.80.)

Stock Analysis: Southern Peru Copper is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from PCU's shares. Sell / Stop Loss: $95.

Gold has shined lately, aided by near-record weakness in the U.S. dollar, strength in commodities like oil and grains, and safe haven buying amid turmoil in credit markets.

Since the low point in mid-August, the yellow metal -- which has an equivalent exchange-traded fund, the streetTRACKS Gold Trust (NYSE: GLD) -- has gained nearly 10% and is fast approaching the highs seen in May 2006.

Interestingly, strength in gold has not quite spilled over into silver -- which has an equivalent exchange-traded fund, the iShares Silver Trust (AMEX: SLV). Silver is up a little more than 9% over the one-month span and remains below its 2006 and February 2007 peaks.

Harley-Davidson (NYSE: HOG) volatility at 29 as the company announced it reduces motorcycle shipment & EPS guidance.

HOG is recently trading at $48.80 in pre-open trading, below its close of $54.09. HOG lowered motorcycle shipment and financial guidance. HOG sees 2007 EPS of $3.69-$3.77 vs. consensus of $4.12. Jim Ziemer, CEO of HOG, says ,"this is a difficult time for the U.S. consumer." HOG September option implied volatility of 29 was near its 26-week average of 27 according to Track Data, suggesting slightly larger price risks.

Market Vectors Gold Miners ETF (AMEX: GDX) volatility elevated as gold trades above $700.

GDX seeks to replicate the performance of gold and silver mining companies represented in the Amex Gold Miners Index. GDX closed at $40.95. Gold is up 0.33% to $706.90 according to Bloomberg. GDX option volume of 20,596 contracts was heavy on 9/6/07. GDX over all option implied volatility of 37 is above its 26-week average of 32 according to Track Data, suggesting larger risk.

General Motors (NYSE: GM) October volatility up into UAW 9/14 contract deadline.

GM closed at $31.07. The UAW's current four-year contract with all three automakers is set to expire on September 14. Goldman Sachs says, "cutting estimates, target goes to $37; retain Buy on UAW talks." GM September option implied volatility is at 43; October is at 47; above its 26-week average of 41 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Pan American Silver Corporation (NASDAQ: PAAS) demonstrates some of the problems with precious metals mining company stocks. No matter the location of operations, all precious metals mining companies are governed by the same set of rules that affect profitability: mining-operations costs, including production costs which can vary widely from mine to mine; grade quality of ore mined, including how much usable by-product is also produced; economy of scale, although sometimes in mining bigger is not of necessity better; and prices of precious metals on the worldwide spot market. A recent PAAS quarterly earnings release illustrates these factors and the damage they can inflict even on well-run mining operations.

The good news for PAAS 1Q 2007 net income is that there was, in fact, income during the quarter: $20.4 million or $0.27 per share compared to a 1Q 2006 loss of $2.8 million or $0.04 loss per share. $10.25 million or $0.13 per share of net income was derived from the decision to sell a portion of mining operations in Russia. 1Q 2007 sales increased 5% to just over $48 million. FY 2007 total production is forecast to increase 31% to 17 million ounces.

According to the Commodities Watch [subscription required] column in Tuesday's Wall Street Journal, analysts believe that the growth in exchange-traded funds has "buoyed" the prices of gold and silver. According to John Reade of UBS, the amount of gold in ETFs is "quite an impressive number." Basically, what has happened is this: As fund managers anticipated a growth in interest in investing precious metals, they established gold and silver ETFs. To establish the fund, they acquired large quantities of these metals, reducing the liquidity in the market. This, in turn, drove prices up, which in turn, attracted more investors and so on.

This is an interesting illustration of John Maynard Keynes's investing philosophy occurring on a large scale. While he is best known as more of a macro-economist, he provided one of the most compelling metaphors for financial markets.

Suppose that a newspaper hosts a beauty contest where entrants are asked to look at 100 photos of models and select the six that they thought were the most beautiful. Prizes would be awarded to readers who voted for the models who received the most votes. How would you vote? It would be naive to simply select the ones that you liked most. What if you have different tastes than the average person? Instead, you must try to select the models who will be considered most attractive by the average reader. However, the other readers will be making their selections the same way.

To quote Keynes: