Gold rose a few dollars in Asia, fell back near unchanged on London, and then plummeted in midmorning New York trade to as low as $585.00 before it rebounded nearly $5 into the close and ended with a loss of 0.87%.Silver remained near unchanged in Asia and London and traded nearly 10 cents higher in early New York trade, but it also dropped severely in midmorning New York trade to as low as $11.54 before it rebounded into the close and ended with a loss of 1.19%.
Euro gold fell to about €470, platinum lost $3 to $1,079, palladium lost $5 to $315, and copper dropped nearly 7 cents to about $3.46.
Gold and silver equities fell over 2.5% in morning trade, but they slowly crept higher in afternoon trade and ended with less than 1% losses.
The Economy:
Report
For
Reading
Expected
Previous
PPI
Sep
-1.3%
-0.7%
0.1%
Core PPI
Sep
0.6%
0.2%
-0.4%
Net Foreign Purchases
Aug
$116.8B
$53.0B
$32.9B
Industrial Production
Sep
-0.6%
-0.1%
0.0%
Capacity Utilization
Sep
81.9%
82.2%
82.5%
While headline PPI was tame due to falling gas prices, Core PPI came in much higher than expected due to a recovery in auto sales. Inflation fears rose due to the Core PPI reading, but falling wholesale PPI and falling industrial output point to an economic slowdown and ease any fears raised about a possible interest rate hike to combat inflation as a hike would further hurt economic growth.Net Foreign Purchases came in at a record high and easily covered August’s record high trade deficit of $69.9 billion announced last week.Also making economic news today was a NAHB report which showed homebuilder sentiment climbed in October after it had fallen for 8 straight months to a 15 year low.
Tomorrow at 8:30AM EST brings CPI for September expected at -0.3%, Core CPI expected at 0.2%, Building Permits for September expected at 1,715,000, and Housing Starts expected at 1,650,000.
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Oil started off the day higher on a likely OPEC cut, but it then fell for the rest of trade on speculation over ample supplies in tomorrow’s inventory report.
The U.S. dollar index fell and treasuries rose despite increased inflation fears as poor economic data may have a greater influence on the fed in terms of keeping interest rates unchanged at their meeting next week, but any gains or losses were pared to minimal by the end of trade as most looked ahead to tomorrow’s CPI report.
The Dow, Nasdaq, and S&P fell on inflation worries and on worries over an economy which may be slowing faster than anticipated.
Among the big names making news in the market today were Yahoo, IBM, Intel, Motorola, Office Depot, Wal-Mart, EMC, Wells Fargo, CME and CBOT, Merrill Lynch, Lilly and ICOS, and Johnson & Johnson.
The Commentary:
“Over the past weeks and even months there has been a good deal of financial market commentary about the commodity price bubble bursting. Not so in this column. It has been my thinking for a long time that those who believed the price run-up was solely due to excessive hedge fund speculation were badly mistaken. Due to Café sleuthing and input coming my way, it appeared a fair amount of this buying was quietly going into Chinese hands (among others) behind the scenes … and that supply would not be coming back on the market.
What else might the Chinese be doing with their TRILLION dollars in US dollar reserves?
It now appears the base metals have finished their consolidation and, one by one, are breaking into new high ground. Gold and silver were FORCED (manipulated) down ahead of the coming US elections, and my GUESS is that oil has been too. Both gold, silver and oil should be MUCH higher by year end.” - From yesterday’s Midas report byBill Murphy of LemetropoleCafe.com
“December Gold finished down 5 at 593.5, 6.3 off the high and 4.5 up from the low.
December Silver closed down 0.13 at 11.78. This was 0.15 up from the low and 0.2 off the high.
From the early mix of fundamental and technical conditions in gold to the late afternoon time frame a number of very disappointing developments were seen. In addition to a solid reversal in the energy complex, the market was also disappointed by the sharp slide in equity prices and the conflicting news from the inflation front. One can hardly discount the slack industrial production readings, especially with the sharp slide in the equity market adding to the macro economic concern. It also seemed like the gold market was disappointed in the lack of progression in geopolitical developments. However, there was more saber rattling from North Korea with the country saying imposing UN sanctions would be an act of war and there is widespread speculation that North Korea will conduct a second weapons test despite international pressure against it. While traders did report physical demand for gold helped to limit losses on Tuesday, news of a 30 decline in jewelry exports from Turkey in September from year ago also weakens sentiment. Another trigger factor pressuring gold prices was the market's inability to hold above a key psychological price level as the trade citing producer selling from Australia and South America around the highs of the day.
Although silver traded lower on Tuesday, the market seemed to hold up better than gold or copper, but sharp declines in these two metals was certainly a negative for the silver market. Weak readings on the economy and a slump in stock prices prevented silver from making a push through key levels which likely encouraged profit taking in the metal. September industrial production fell .6% with the durable goods sector down 1.8% which shifts concerns back toward a soft economy. Producer prices were also soft at down 1.3% on the month so inflation concerns were also put at bay, especially since energy prices fell back on Tuesday.” - The Hightower Report,Futures Analysis and Forecasting
The Statistics:
As of close of business: 10/16/2006
Gold Warehouse Stocks:
7,759,325
-
Silver Warehouse Stocks:
105,187,949
-597,124
Global Gold ETF Holdings
[WGC Sponsored ETF’s]
Product name
Total Tonnes
Total Ounces
Total Value
New York Stock Exchange (NYSE) AND Singapore Exchange (SGX)
Streettracks Gold Shares
390.26
12,547,364
US$ 7,465m
LSE (London Stock Exchange) AND Euronext Paris
Gold Bullion Securities
80.79
2,597,339
US$ 1,535m
Australian Stock Exchange (ASX)
Gold Bullion Securities
9.98
320,740
US$ 190m
Johannesburg Securities Exchange (JSE)
New Gold Debentures
9.89
317,861
US$ 189m
Note: Ghange in Total Tonnes from yesterday’s data: The ASX added 0.04 tonnes.
COMEX Gold Trust (IAU)
Profile as of 10/16/2006
Total Net Assets
$823,905,027
Ounces of Gold in Trust
1,385,649.968
Shares Outstanding
13,950,000
Tonnes of Gold in Trust
43.10
Note: No change in Total Tonnes from yesterday’s data.
Silver Trust (SLV)
Profile as of 10/16/2006
Total Net Assets
$1,221,880,267
Ounces of Silver in Trust
104,277,935
Shares Outstanding
10,450,000
Tonnes of Silver in Trust
3,243.4
Note: No change in Total Tonnes from yesterday’s data.
The Stocks:
Freeport-McMoRan’s (FCX) earnings, Fronteer’s (FRG) drill results, Randgold’s (GOLD) new mine development, Canyon Resources’ (CAU) new VP of Operations, Gold Fields’ (GFI) okayed offer for Western Areas, Glamis Gold’s (GLG) intervenor status, First Quantum’s (FM.TO) mine in commercial production, Silver Eagle’s (SEG.TO) drill results, Scorpio Mining’s (SPM.V) listing on the TSX, First Majestic’s (FR.V) corporate update, and Yale’s (YLL.V) Letter Agreement with IMPACT (IPT.V) to purchase up to an 80% interest in three properties were among the big stories in the gold and silver mining industry making headlines today.
WINNERS
1.Apex Silver
SIL +2.91% $14.51
2.Great Basin
GBN +1.96% $1.56
3.Gold Reserve
GRZ +1.75% $4.07
LOSERS
1.Nevsun
NSU -7.51% $2.71
2.Lihir
LIHR-5.70% $22.35
3.Banro
BAA -5.58% $11.00
Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.
All of today's gold and silver stock news:
Fortune Minerals Completes NICO Underground Bulk Sample - More - October 17, 2006 | Item | E-mail
Amera Intersects 30.23 Metres of 2.67% Copper and 24.1 g/t Silver on 100% Owned Cocha Project - More - October 17, 2006 | Item | E-mail
Jasper Mining Corporation continues diamond drilling on Isintok property - More - October 17, 2006 | Item | E-mail
Forsys Metals Commences Trading on the Toronto Stock Exchange - More - October 17, 2006 | Item | E-mail
Phase 1 Drilling Program Commences on U6 Savant Gold Project - More - October 17, 2006 |
Gold Seeker Closing Report – Gold & Silver Fall About 1%; A Commodity Price Bubble?
“Over the past weeks and even months there has been a good deal of financial market commentary about the commodity price bubble bursting. Not so in this column. It has been my thinking for a long time that those who believed the price run-up was solely due to excessive hedge fund speculation were badly mistaken. Due to Café sleuthing and input coming my way, it appeared a fair amount of this buying was quietly going into Chinese hands (among others) behind the scenes … and that supply would not be coming back on the market. 
