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Precious Metals Review

Market information and news is critical for precious metal investing. However, many investors have limited time to sort through the massive amounts of market data and gold, silver and platinum news. The Monex Precious Metals Review consolidates the week's activities in a concise snapshot of the precious metal markets.

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PRECIOUS METALS REVIEW - OCTOBER 17, 2014

In the precious metals markets this week . . . 

GOLD:
Monex spot gold prices opened the week at $1,227 . . . traded as high as $1,249 on Wednesday and as low as $1,227 on Monday . . . and the Monex AM settlement price on Friday was $1,239, up $12 for the week.  Gold support is now anticipated at $1,215, then $1,200, and then $1,180 . . . with resistance anticipated at $1,238, then $1,253, and then $1,270.

SILVER:
Monex spot silver prices opened the week at $17.38 . . . traded as high as $17.79 on Wednesday and as low as $17.21 on Wednesday and Thursday . . . and the Monex AM settlement price on Friday was $17.31, down $.07 for the week.  Silver support is now anticipated at $17.27, then $17.06, and then $16.64 . . . and resistance anticipated at $17.57, then $17.85, and then $18.08.

PLATINUM:
Monex spot platinum prices opened the week at $1,258 . . . traded as high as $1,278 on Wednesday and as low as $1,241 on Thursday . . . and the Monex AM settlement price on Friday was $1,264, up $6 for the week.  Platinum support is now anticipated at $1,248, then $1,225, and then $1,185 . . . and resistance anticipated at $1,265, then $1,278, and then $1,311.

PALLADIUM:
Monex spot palladium prices opened the week at $787 . . . traded as high as $795 on Tuesday and as low as $730 on Thursday . . . and the Monex AM settlement price on Friday was $756, down $31 for the week.  Palladium support is now anticipated at $735, then $703, and then $678 . . . and resistance anticipated at $761, then $785, and then $812.

QUOTES OF THE WEEK:

From New York Times best-selling author Jim Rickards, writing in The Daily Reckoning newsletter, published by Agora Financial, LLC, on October 14th:

''The economy is experiencing strong deflationary forces as a result of weak employment and deleveraging associated with the depression that began in 2007.  Simultaneously the economy is experiencing strong inflationary forces as a result of Fed money printing.  The deflationary and inflationary forces offset each other to produce a seemingly benign average.  But below the surface the forces struggle to prevail with some likelihood that one or the other will emerge victorious sooner than later.

Inflationary forces often appear only with significant lags relative to the expansion of the money supply.  This was the case in the late 1960s and early 1970s.  The Fed began to expand the money supply to pay for Lyndon Johnson's 'guns and butter' policy in 1965.  The first sign of trouble was when inflation increased from 3.1% in 1967 to 5.5% in 1969.

But there was worse to come.  Inflation rose further to 11% in 1974 and then topped off at 11.3% in 1979, 13.5% in 1980 and 10.3% in 1981, an astounding 35% cumulative inflation in three years.  During this time period, gold rose from $35 per ounce to over $800 per ounce, a 2,300% increase.

The point is that neither the inflation nor the gold price spike happened overnight.  It took 15 years to play out from start to finish.  The Fed's current experiments in extreme money printing only began in 2008.  Given the lags in monetary policy and the offsetting deflationary forces, we should not be surprised if it takes another year or two for serious inflation to appear on the scene.''

. . . and from Richard Russell, founder of Dow Theory Letters, in remarks posted on his website on October 15th:

''Is it a stumble, a correction or a primary bear market?  There is absolutely no way of knowing at this point, but that shouldn't bother me or my subscribers.  We're safely in the only two tangible currencies -- silver and gold.  As I write an hour before the close, the Dow is down over 300 points on increased volume.  This is obviously a distribution day with institutions leaving the market.  Investors' first reaction today was to move into the dollar, but on second thought, investors realized that zero is the fate of all fiat currencies.  On further thought, investors decided to move into the only tangible currencies which need no nation to back them.  Of course I'm talking about silver and gold.  A characteristic of bear markets is that they start each day with buying and end each day with selling.

Subscribers should stay in physical silver and gold . . . ''

''Turning to gold, it closed higher today, and happily the gold mining stocks were higher also, thereby confirming the bullish gold action.

In the news, the stock market was shocked to hear that retail sales were weak.  No mystery about this.  I believe the American consumer is close to being broke.  On top of this, the Producer Price Index was down by 0.1%, indicating that we are in the grip of deleveraging and deflation.  It will be interesting to see the Feds' reaction.

Late Notes -- After a wild day, the Dow closed down 173 with Transports up 18.  I'll be most interested to see tomorrow's newspaper headlines.  I call it a hell of a day.''

. . . and from David Malpass, in an editorial on the ''Opinion'' page of The Wall Street Journal on October 16th:

''The Federal Reserve has been a bulwark of America's market economy.  Yet with interest rates at near zero since the 2008 financial crisis and the Fed now controlling huge swaths of the financial industry, a central-banking approach I call 'post-monetarism' has settled in.  It's built on the absurd view that zero rates promote growth and that regulators can replace markets -- an immodest dogma that has hammered growth.''

''The Fed has in effect become the king of banks, able to violate the liquidity, leverage, capitalization and regulatory standards imposed on private banks.  America's financial industry faces a morass of litigation, huge fees and arbitrary capital requirements when they step out of line, while the Fed has piled up a record maturity mismatch -- risky short-term debt to fund long-term assets.  The Fed's debt has reached 78 times its equity capital.''

''The Fed has fostered the illusion that it can create growth.  The zero-rate problem is obvious to almost everyone outside the Beltway.  Credit markets don't function with prices set at zero, and the economic results have been disastrous, with median incomes severely depressed five years into the expansion.  Each month the Fed delays a return to market-based monetary policy compounds the financial distortions, sacrificing the investment and hiring needed to create faster growth.''

. . . and from Steve Forbes, in his ''Fact & Comment'' column in the October 20th edition of Forbes magazine:

''The global economy is a mess today because most economists, bankers and political leaders don't understand that most basic of subjects: money.  When it comes to monetary policy, they have it backwards, thanks to the misbegotten ideas of John Maynard Keynes.  Before Keynes and like-minded peers, economists understood that the real economy was the creation of products and services.  Money was the symbol economy.  It represented what people had produced.  It was a facilitator of commerce.

The ability of people to trade with one another is how we achieve a higher standard of living.  Money measures wealth; it is not wealth itself.  It is a claim on products and services that people have created.  That's why counterfeiting is illegal; it's thievery.  But when government does this, it's called quantitative easing, or stimulus.''

Last update: Oct 17, 2014 11:14:34 AM

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