Timberline Resources Corp. [OTC-BB: TBLC] Upside Through Discovery • Record Revenues - Drilling Services

The Markets:

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

Oil rose in afternoon trade after terrorist threats to oil structures in the Persian Gulf.

The U.S. dollar index fell and treasuries rose on the poor GDP report that raised economic growth fears and led most to believe that the fed will not raise interest rates anytime soon.

The Dow, Nasdaq, and S&P fell at the open on worries over severely slowing economic growth, rose back up near unchanged by early afternoon, sold off sharply into the close, and ended with notable losses.

Among the big names making news in the market Friday were Ingersoll-Rand, Volkswagen, Avon, Alltel, Cemex and Rinker, Timberland, Chevron, GM, and Citigroup.

The Commentary:

“Something has to give, and it should following the elections. If interest rates go up much from here, the housing picture will deteriorate further, taking the stock market with it. If they don’t, the dollar should sink like a stone. How will the Chinese take that with their 1 trillion in dollar reserves? Perhaps the stock market will advance further on liquidity factors. I don’t think so. The PPT, Working Group on Financial Markets, and Counterparty Risk Management Group can win the day in the short term, but their efforts have only so much sustainability. What we know that Planet Wall Street does not (or does not want to deal with publicly) is that the Orwellians are grooming US financial markets for the elections. Once the elections are over, it is every man/firm, for himself.

When it comes to gold, The Gold Cartel has just used up a good deal of its supply at these price levels. They are straining like a train going up a mountain. It is eventual suicide to keep dumping cheap gold at these levels with demand for physical soaring. Thus, the gold price should roar higher going into year end no matter what else occurs in the financial market arena.

Silver? It could blow sky high at any time.”- From yesterday’s Midas report by Bill Murphy of LemetropoleCafe.com

“December Gold finished up 1.2 at 601, 1.5 off the high and 4.9 up from the low.

December Silver closed down 0.16 at 12.08. This was 0.04 up from the low and 0.16 off the high.

The gold market actually managed to perform well during the session Friday, especially when one considers that the US economic numbers released during the session were seen as disappointing and in most cases were considered somewhat deflationary. However, offsetting the fear of slowing physical gold demand and softening inflation, were more significant declines in the US dollar. One might also suggest that the action in the energy complex was mostly supportive even though the energy market waffled around on both sides of unchanged throughout the session. On the other hand, seeing the December contract mostly hold up around the $600 level after being presented with early negative pressure from a series of outside markets might be considered a victory of sorts by some players. We suspect that the gold market saw some support from Fed dialogue as the Fed's Stern seemed to be priming the market for a longer term rise in inflation. In fact, the Fed's Stern suggested that he was in favor of an inflation target and that the US has already enjoyed a long period of low inflation. In other words, the trade might see that dialogue as a warning that low inflation is set to go away. In the end, the direction of oil prices seemed to remain in control of gold prices.

The silver market continued to take its cue from the gold market, which in turn was taking its cue from the oil and currency markets. The copper market gave off almost no direction with its action and moderately significant weakness in the equity market and the US numbers could have pressured the silver market, if the market were paying close attention to the prospects of physical demand. In the near term the trade thinks that silver is not the primary market and that the majority of action in silver will come from outside forces. In fact, significant gains in lead and zinc prices hardly registered on the silver market and it is painfully clear that soft economic readings from the US were almost ignored and for the bull camp that is a positive development.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

James Turk: The dollar weakens while gold strengthens

The Statistics:

As of close of business: 10/26/2006

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: Change in Total Tonnes from yesterday’s data: 46.5 tonnes were added to the trust.

The Stocks:

Penoles’ earnings, DRDGold’s (DROOY) empowerment holding, and Gold Fields (GFI) power initiatives were among the big stories in the gold and silver mining industry making headlines Friday.

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