The Metals: Gold and silver saw minor gains in early Asian trade, but they then steadily fell back off for the rest of the day and ended near their lows of $732.20 and $9.37 with losses of 4.12% and 5.66%. Both metals have continued to fall in after hours access trade as well. Euro gold fell to about €571, platinum lost $35 to $842, and copper fell another 15 cents to about $1.85. Gold and silver equities dropped throughout the session and ended with about 16% losses. The Economy: There were no major economic reports today, but the “Mortgage Bankers Association's seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, slid 16.6 percent to 408.1 last week, the lowest reading since December 2000.” Tomorrow at 8:30AM EST brings Initial Jobless Claims for 10/18 expected at 465,000. The Markets: Oil fell yet again to a new 16 month low on expectations of still lower demand heading forward. The U.S. dollar index rose to its highest since November 2006 as the Euro and Pound plunged again on expectations for even worse economic growth in Europe than in the US that will likely push the ECB and BoE towards cutting interest rates. Many also expect the fed to cut interest rates at their meeting next Wednesday, but that doesn’t seem to be having much of an impact on the currency market aside from some yen strength versus nearly every other world currency as most seem to believe that the US will be able to endure a recession better than most of the rest of the world. Treasuries rose further as the Dow, Nasdaq, and S&P fell about 5% on mostly poor earnings reports and outlooks that pretty much confirm a recessionary environment for at least the near future. Among the big names making news in the market today were Merck, ConocoPhillips, Wachovia, Boeing, AT&T, SanDisk and Samsung, and McDonald’s. The Commentary: “Dear Friends, Gold is a currency that you will see perform as the currency of choice. There is no doubt we are headed into a planetary Weimar experience to some degree. Dollars are being created faster now than in any other period in history. The Fed and treasury are guaranteeing everything from money market funds to large corporate entities in one way or another. The first valuation of worthless OTC derivatives via a public sale of these at .0875 to .02 cents shocked anyone with a brain. Now the downturn in business is hitting financial entities and shortly litigation will smoke whatever is left. The FDIC is already yelling for additional and significant funding from congress as their capital contracts on every Friday’s bailout. People expect things to return to normal in 2010. That is a fairy tale. The Fed has only started creating money for bailouts. You saw what happened when they stepped away from Lehman. If you say you didn't look out the window. All these bailouts and Federal guarantees on credit items constitute a white wash on a falling economic structure going out of control and soon. The out of control point of major planetary dislocation is between 14 and 89 days from now…”- Jim Sinclair, JSMineset.com “December Gold closed down 32.8 at 735.2. This was 2.2 up from the low and 23 off the high. December Silver finished down 0.615 at 9.46, 0.46 off the high and equal to the low. The gold market started out under moderate pressure and seemed to gather downside momentum throughout the trading session. Clearly a somewhat historical rise in the Dollar accentuated the washout in gold but with sharply lower energy prices also being seen the bearish arguments were quite convincing. In fact, with a host of physical commodity markets under severe pressure on Wednesday and the stock market pricing in what seems to be a severe and sustained US recession apparently some gold bulls were probably unwilling to stand in position against multiple bearish angles. The silver market was down sharply in the wake of the latest slide in gold prices. However, the December silver contract seemed to initially reject a test of a prior daily low of $9.525 but eventually the market failed at the level. Clearly the silver market was encountering broad based deflationary selling, fears of extended slowing and some currency related pressure. In the end, both gold and silver prices gave off the impression on Wednesday that a protracted slowdown in the economy was being seen as a definitive negative for all the metals markets.”- The Hightower Report, Futures Analysis and Forecasting

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