Crude Oil Buoyed by Bargain Buying Crude Oil (WTI) – $81.48 // $0.37 // 0.45% Commentary: Crude oil rebounded in step with U.S. equity markets on Thursday, as bargain hunters scooped up financial assets after several days of declines. Oil settled $1.41, or 1.75%, higher at $81.85. Prices are still down notably from the 25-month highs of last week near $88.63. There was little news of substance to drive trading action during the day, as the Ireland crisis still remains unresolved. Instead, traders speculated that the country would end up taking a bailout and all would be well. Though the situation in Ireland will likely do little to stem global growth- the country represents less than half a percent of world GDP- price action could remain choppy as the negative news flow associated with Ireland- and Europe more generally- is digested. We still favor the long side on crude and would view dips below $80 as attractive opportunities to accumulate. Yesterday oil fell near that level and there is a possibility of a restest in the coming days. Technical Outlook: Prices have put in a bullish Piercing Line candlestick formation above support at $79.49, hinting that a deeper upward correction may be in the cards. A break above horizontal resistance at $83.27 exposes the underside of a previously broken rising trend set from mid-September, now at $85.62. Alternatively, renewed selling through $79.49 exposes a larger trend line at $77.15. Gold Rises and Silver Surges as Dollar Fumbles Gold – $1352.30 // $0.77 // 0.06% Commentary: Gold rose for the first time in five days, adding $17.07, or 1.28%, to settle at $1353.07. The U.S. dollar also moved lower; as measured by the trade-weighted dollar index, the greenback fell 0.63%. In our latest Gold – Forex correlations report we wrote: “Although prices have rebounded from the recent lows under $1330, we can’t help but wonder if the advance is getting long in the tooth. ETF holdings are near levels they were at back in July, but gold prices are $100 higher than they were at that time. Over the last several years we have observed an extremely strong relationship between these two variables, thus caution is warranted. Nevertheless, there is always the possibility that demand is coming from other segments of the gold market such as the physical investment side, which we cannot measure in real-time.” Technical Outlook: Prices rebounded to re-test a previously broken rising trend line set from late July, now at $1361.45 having found support above support at $1322.39, the 38.2% Fibonacci retracement for the 7/28-11/9 advance. A break above this boundary exposes the horizontal barrier at $1387.35. Alternatively, renewed selling that takes prices through current support will target the 50% Fib at $1290.81. Silver – $26.86 // $0.11 // 0.40% Commentary: Silver soared $1.33, or 5.2%, to $26.97 on Thursday. This metal seems to be a speculators paradise with moves of 5% or more becoming par for the course. The gold/silver ratio stands at 50.4, making its way back to the lows for the year, which are incidentally, the lowest since February 2008. (The gold/silver ratio measures the relative performance of the two precious metals. A higher ratio indicates gold outperformance, while a lower ratio indicates silver outperformance). Technical Outlook: Prices have continued higher to overcome resistance at $26.87, the 38.2% Fibonacci retracement of the 10/22-11/09 upswing. From here, the bulls target the 23.6% Fib at $27.82, with a break above that exposing the 30-year high at $29.36. The 38.2% level has been recast as near-term support, with a reversal back below that exposing the 50% retracement at $26.10.

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