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I palm mute with the fleshy edge of my hand near the pinky. I rest this part of my picking hand on the strings where they cross the bridge saddles. By rolling my hand, I can control the amount of muting I apply to the strings. I find that an additional benefit is that I always know exactly where my pick is, relative to the strings, because my hand is 'anchored' at the bridge. I sometimes have to shift my hand a bit, to accomodate the reach of my pick, but I find this technique works well for me.