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The Markets:

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

Oil opened briefly higher after OPEC officially cut production by 1.2 million barrels a day which was slightly higher than expected, but it then fell off throughout the rest of trade and ended about 3% lower at an 11 month low on skepticism that OPEC will not actually follow through on the cut.

With no economic news to act on, the U.S. dollar index and treasuries remained near unchanged as traders looked ahead to next week’s fed meeting.

The Dow, Nasdaq, and S&P fell on mostly poor earnings reports at the open, but all three indices steadily rose throughout trade as oil fell and the Nasdaq and S&P ended slightly higher while the Dow ended a bit lower.

Among the big names making news in the market Friday were Google, 3M, Caterpillar, Merck, Schlumberger, and Schering-Plough.

The Commentary:

“The Gold Cartel has done a masterful job in "setting up" the various types of funds. They are very short relative to their historical positions in the gold and silver markets. With the cash market so firm, and the specs so short, and the elections less than 3 weeks away, we have a setup for gold and silver to move higher and then explode … as the spec shorts get squeezed and then go LONG!

That is, and has been, the scenario recently … one that has been building, which is why the gold open interest has gradually moved up, instead of liquidating. It went up again yesterday, this time rising 2230 contracts to 332,105.

The unfolding of that scenario began in earnest this morning on the Comex. After the price capping of late, and the goofy Comex close yesterday, the physical buyers took a look-see early in London. The AM Fix came in at $589.75 up slightly, with silver at $11.62, off sharply. As things would have it, the relentless cash buying and keeping the gold price steady (silver too) was enough for "the funds" to BEGIN covering this morning on the Comex. After trading on the downside, both gold and silver took off and kept on going.”- From yesterday’s Midas report by Bill Murphy of LemetropoleCafe.com

“December Gold finished down 6.1 at 596.4, 6.4 off the high and 1.9 up from the low.

December Silver closed down 0.195 at 11.965. This was 0.075 up from the low and 0.185 off the high.

While seeing December gold prices manage a second daily trade above the $600 level was initially supportive to the gold market, the trade was certainly undermined by the inability to hold above the $600 level. However, seeing the oil market basically thumb its nose at the recent OPEC move to reduce production certainly prompted some long profit taking in the gold market. Some traders also pointed to significant weakness in other physical commodity markets and to the slide in equity prices as a reason to bank long profits. With the Dollar seemingly making an attempt to bounce, one might even suggest that the currency markets were indirectly responsible for a portion of the selling pressure in gold. While one probably wouldn't describe the environment Friday as deflationary, seeing the OECD forecast for slower 2007 world growth and lower oil demand might have been undermining for gold prices.

In addition to the weakness from the gold market, the silver market was also presented with aggressive selling in the copper market and those two outside market conditions could have really turned up the selling pressure in the silver market. Some players suggested that the ability to avoid even more selling in the silver market in the face of declines in copper and the equity market seems to suggest that the silver market is perhaps closer to a technical balance than many might have expected after the 52 cent October low to high rally.”- The Hightower Report, Futures Analysis and Forecasting

The Statistics:

As of close of business: 10/19/2006

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: Change in Total Tonnes from yesterday’s data:  The LSE added 1.56 tonnes.

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:

Barrick’s (ABX) extended bid for Pioneer (PSM.TO), Banro’s (BAA) corporate update, IRC’s (ROY) listing on the American stock exchange, and IMA’s (IMR) timeline of appeal were among the big stories in the gold and silver mining industry making headlines Friday.

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:

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- October 20, 2006 | Item | E-mail