Hi Why9999,

First let me say that PageRank and ranking in the SERP are two entirely different things. Many folks get those two things confused. The way your question was asked left enough ambiguity to generate mixed responses, relating to these two very different items. Let me address each item separately and in turn.

PageRank, which is named after Google co-founder Larry Page, is a relative score based on the number of direct and indirect incoming links to a URL, represented using a logarithmic scale of 0 to 10. No amount of outbound links has any effect whatsoever on your PageRank score.

This PageRank score is used to weight the value of relevant outbound links from that page to it's destination page. This relative weighting value is divided equally among all the different outbound URLs. It's important to note that outbound links do not drain any PR from the page where they are placed. Instead those outbound links dilute the weighting value that influences the linked to page (not the linked from page). The page where the link is placed is not diminished but the weight and influence those links have on the landing page is diluted.

So, when you link out to lots of other pages there is no negative affect to your page, you are simply dividing the benefit that is passed to those destination pages. The only thing that affects your page's PR are the inbound links to your page.

Now on to how links affect your SERP ranking. Your pages are ranked in SERPs based primarily upon your page's relevancy score for the keyword term used for that search. Both inbound and outbound links to and from your page will influence your page's relevancy score. Your page''s PR score has virtually no direct influence on where your page will rank in the SERP.

Backlinks are important for ranking, but not for how they influence your PR score, but instead for how they influence your page's relevancy score. Outbound links can be just as influential as inbound links on your relevancy score.

Some folks pursue the practice of hoarding PageRank. Accumulating PR does not help your page rank for a particular keyword, but it does increase the influence your page's outbound links will have on other pages. By linking to fewer pages you can concentrate the power of those few outbound links you do place.

There are many other considerations when creating your web of links, this explanation is meant to give you an idea of the basic concepts.

To add what Don has said, the PR you see in the Google bar is NOT the real PR. The real PR is refered to as "internal PR". And while (internal) PR is likely used to some degree in search engine ranking, it is merely one of many factors. Therefore, even if PR is used in the rankings, you won't see a direct correlation between PR and the ranking.

In addition to PageRank, there's a concept called "Hilltop" which tries to detect if pages/sites that link together are related, or as Google calls it, "affiliated". For example, if you have a site with a PR5 and link to another site that Google believes is also owned by you, this link may not pass as much "juice" as a link on the same page that points to another "unaffiliated" page.

PageRank is a pure math forumula, whereas Hilltop tries to detect if links have some bias.

And, I'm one that highly believes in linking to well respected, high quality resources as a way to improve your own ranking. Most SEOers believe that linking to "bad neighborhoods" hurts your SEO, so it stands to reason that linking to "good" sites may help your SEO. You may also inherit some of the "trust" and "relevancy" of the pages you link to. In no way will linking to high-quality, relevant pages ever hurt you, and it makes a lot of sense that it should help a page.

Rumors are Google has cracked down on PR "scultping", which is trying to manipulate the power of PR through the use of the nofollow tag. It's possible that Google may ask of a page that uses a lot of nofollow tags, "If it's such a good page, why do you have so many spammy links on it?"

I use nofollow only on affiliate links and to site pages such as disclaimers, TOS, contact, etc. IF I link out, I do so to high quality, relevant pages and don't use nofollow.

My answer to your question is to simply be natural. If you really find some quality content on another website then link to it you really want to. Don't link out just because you think Google will like it.

If you link out to other websites without the no-follow tag or some javascript in place, then yes you send out pagerank, but it's ok. You conserve most of it unless you're building an insane link farm with a lot of outbound links.

The truth is nobody really knows exactly how Google works when it comes to organic rankings, we only speculate. And your best bet is to be natural about everything you do in terms of linking out and you should be fine.

My opinion is that I'll link to someone if I got value from the site and I think my readers would too - that's the only way. I won't link out to some authority site just to make Google think my site is good, I personally think that's nonsense.