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The Markets:

Charts Courtesy of http://finance.yahoo.com/

Crude inventories built 5.1 million barrels, gasoline inventories fell 5.2 million barrels, and distillate inventories fell 4.5 million barrels.  Utilization came in at a lower than expected 2.9%.  Oil initially rose on the larger than expected drops in gasoline and distillate inventories, but it later began to fall on the larger than expected build in crude inventories.  OPEC’s meeting tomorrow that is expected to cut output was also on trader’s minds as oil closed over $1 lower.

The U.S. dollar index rose slightly on surprisingly strong Housing Starts, but gains were limited with mostly in-line CPI readings and weak Building Permits data.

Treasuries ended with slight gains as interest rates closed slightly lower after economic data reinforced the view that the fed will continue to keep interest rates unchanged.

The Dow rose nearly 100 points to as high as 12,048.47 at the open and the Nasdaq and S&P followed it higher, but all three indices soon fell off and all traded at least slightly lower at one point before the Dow and S&P rebounded and ended marginally higher on the day.

Among the big names making news in the market today were American Airlines, Verizon, Piper Jaffray, IBM, Apollo Group, Time Warner, General Dynamics, JPMorgan, and Mellon.

The Commentary:

“Today’s descent in the price of gold was the least surprising one I have seen in 8 years of writing this commentary. It had Gold Cartel written all over it the last two days and this morning. Why:

*Two consecutive daily price cappings after opening surges.

*The notable horrid action of the HUI the past two days, which told us JP Morgan and friends were all over it, ready for hit today.

*A core PPI today of .6%, which is way too high … and as we know, when a US financial market report comes out that signals that inflation is a threat, gold is whacked … almost ALWAYS … ALWAYS!” - From yesterday’s Midas report by Bill Murphy of LemetropoleCafe.com

“December Gold finished down 0.9 at 592.6, 5.4 off the high and 0.6 up from the low.

December Silver closed up 0.04 at 11.82. This was 0.04 up from the low and 0.16 off the high.

The gold market did attempt some early strength but failed to hold that strength into the close. In fact, the failure to see prices rise above the critical psychological level of $600 in the December contract is viewed by some in the trade to be a moderately negative development. However, given that the Dollar finished higher, that crude oil market actually posted a new low close on the session, there was certainly plenty of outside market fundamentals applying pressure to gold prices. Even the US economic report slate seemed to favor the bear camp as the housing numbers showed both growth and contraction, while the CPI report showed a significant dampening of headline inflation but also posted a rather robust up tick in annual change in core inflation readings. Apparently all the talk early in the session about strong Asian physical buying interest and the expectation of strong Indian festival demand was glossed over by the developments from the US trade.

While the copper market tried to rally from a rather significant early washout, the silver and other base metals markets seemed to fight an uphill battle throughout the session Wednesday. While the stock market was able to post more new all time highs in a number of market measures early in the session, the action in equity prices was choppy and therefore of little help to silver. With the gold market also undermining and the new low in the energy complex, the silver market would seem to trade on under a minor outside market liquidation threat.” - The Hightower Report, Futures Analysis and Forecasting

The Statistics:

As of close of business: 10/17/2006

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 Note: No change in Total Tonnes from yesterday’s data.

COMEX Gold Trust (IAU)

 Note: No change in Total Tonnes from yesterday’s data.

Silver Trust (SLV)

 Note: No change in Total Tonnes from yesterday’s data.

The Stocks:

Ivanhoe’s (IVN) partnership with Rio Tinto (RTP), Silver Standard’s (SSRI) production decision at Pirquitas, Apogee’s (APE.V) meeting with the Bolivian State Mining Agency, and Minefinders’ (MFN) intent to offer and sell US$75 million aggregate principal amount of its Senior Convertible Notes were among the big stories in the gold and silver mining industry making headlines today.

WINNERS

LOSERS

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:

Harte Gold Corp. Completes $1,383,000 Financing - More
- October 18, 2006 | Item | E-mail

Coronation Minerals Inc.: Drilling Results From Wellgreen Mine Property - More
- October 18, 2006 | Item | E-mail

Eloro Identifies Second Polymetallic Zone in James Bay Mine District, Eastmain 1 Property Grab Samples Yields up to 2.85% Copper and 14.8 G/T Silver - More
- October 18, 2006 | Item | E-mail

Nuinsco Announces Rights Offering To Shareholders - More
- October 18, 2006 | Item | E-mail

HE-5 Resources, Corp. Acquires Claims in Matagami Mining Camp - More
- October 18, 2006 | Item | E-mail