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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 31, 2014

In the precious metals markets this week . . . 

GOLD:
Monex spot gold prices opened the week at $1,231 . . . traded as high as $1,234 on Tuesday and as low as $1,162 on Friday . . . and the Monex AM settlement price on Friday was $1,172, down $59 for the week.  Gold support is now anticipated at $1,162, then $1,151, and then $1,144 . . . with resistance anticipated at $1,180, then $1,208, and then $1,272.

SILVER:
Monex spot silver prices opened the week at $17.19 . . . traded as high as $17.38 on Tuesday and as low as $15.84 on Friday . . . and the Monex AM settlement price on Friday was $16.11, down $1.08 for the week.  Silver support is now anticipated at $15.80, then $15.31, and then $14.56 . . . and resistance anticipated at $16.12, then $16.73, and then $17.11.

PLATINUM:
Monex spot platinum prices opened the week at $1,255 . . . traded as high as $1,275 on Wednesday and as low as $1,222 on Friday . . . and the Monex AM settlement price on Friday was $1,233, down $22 for the week.  Platinum support is now anticipated at $1,220, then $1,191, and then $1,183 . . . and resistance anticipated at $1,249, then $1,267, and then $1,304.

PALLADIUM:
Monex spot palladium prices opened the week at $783 . . . traded as high as $801 on Wednesday and as low as $779 on Thursday . . . and the Monex AM settlement price on Friday was $793, up $10 for the week.  Palladium support is now anticipated at $786, then $770, and then $734 . . . and resistance anticipated at $795, then $810, and then $840.

QUOTES OF THE WEEK:

From Isabella Zhong, in a posting on the Barron's magazine website on October 27th:

''Once dismissed as a 'barbarous relic' by John Maynard Keynes, gold has been on the receiving end of some market barbarity in recent months.

The gold price has fallen nearly 11% from its March high of US$1,379 an ounce as expectations of gathering momentum in the US economic recovery and, more importantly, further gains in the US dollar have erased the luster from the precious metal that notched up an impressive 12 consecutive years of gains up until 2012.''

''Gold prices and the US dollar have historically moved in opposite directions, so it should come as no surprise that the rise in the US Dollar Index to its highest level since 2010 has been accompanied by a slide in the price of the yellow metal to a one-year low earlier this month.  Analysts argue the US dollar may move higher as the world's largest economy recovers and the US Federal Reserve begins to unwind its ultra-loose monetary policy.

But with gold having plumbed a one-year low of USD1,192 an ounce earlier this month, there are some analysts who figure the worst of the pain may be over.  To be clear, that doesn't mean there won't be further volatility.  Gold remains a favorite plaything for speculators, with the growing list of worries spanning global economics and geopolitics ensuring the yellow metal may be prone to whipsaw trading over coming months.

However, with the gold price approaching the level at which many miners break-even on the ounces they dig out of the ground, basic industry economics suggests the commodity may find some support at current levels.  The World Gold Council estimates the average cost of producing an ounce of gold is around US$1,200.  If the price was to fall under this level, that would force higher cost producers out of the market.  Afterall, why produce loss-making ounces when you can keep the resource in the ground and sell it for a profit when, and if, the gold price rebounds?''

From an editorial on the ''Issues & Insights'' page of Investor's Business Daily on October 28th:

''Government Abuse: No one should have been surprised to learn that the IRS is seizing Americans' bank accounts even when no law has been broken.  It's an agency operating well beyond its mission.''

'' The IRS and other arms of government have developed a habit of using drug trafficking, racketeering and terrorism laws to justify extralegal seizures.  The Times -- the government-snuggling New York Times! -- says, 'The practice has swept up dairy farmers in Maryland (and) an Army sergeant in Virginia saving for his children's college education.'

Sometimes the amounts of personal money vacuumed by the tax collectors are enormous.''

''The IRS isn't the only government agency, nor is the the federal apparatus the only level of government, that routinely takes citizens' money virtually at whim.

But the IRS is a unique troublemaker.  Because it is to the U.S. Congress what a debt collector is to a Mafia don, it can touch every American's life.  It has peculiar powers that let it abuse its position and violate due process.''

''Bob Woodward suggests that the media investigate it as it did Watergate.  We laud his bravery.  He's opened himself up to attacks from two vicious and unaccountable adversaries: the IRS and the mainstream media.''

. . . and from an editorial on the ''Opinion'' page of The Wall Street Journal on October 30th:

''The best case for QE, when it began amid the financial panic of late 2008, was an extraordinary tool to provide liquidity and restore confidence.  That was needed at the time, and we supported it.

The evidence of QE's benefits in its second and third iterations is far more speculative and its full costs still aren't clear.  Those won't be known until the Fed winds down its balance sheet, if it ever does, and until we see how markets and the economy respond to rising interest rates.  For all the market's anxiety about the end of QE, it seems to be ending without a stir.  Maybe that's because it was never as helpful as advertised.''

. . . and from Frank Tang and Clara Denina, in a posting on the Reuters website on October 31st:

''Gold and silver slumped to their lowest since 2010 on Friday as the dollar surged against the yen and other major currencies after the Bank of Japan shocked global financial markets by expanding its massive stimulus spending.

Spot gold broke below $1,180 an ounce, a level bullion had held twice during its last two major sell-offs in June and December last year.  It also briefly held the mark earlier this month until Friday's drop.

The yen plunged to a near seven-year low against the U.S. dollar on Friday, putting it on track for its worst day in 18 months, after the Bank of Japan shocked financial markets with an aggressive easing of its monetary policy.''

'' 'The main reason for gold's fall is the strength in the dollar after the BOJ's desperate efforts to weaken the yen,' said Jeffrey Sica, president and chief investment officer at Sica Wealth Management, which oversees $1 billion in client assets.

'Gold could fall further in the short term as the dollar could rise more in the short term, but gold should eventually benefit as a hedge against the uncertainties and economic turmoil brought by central-bank actions,' Sica said.''

. . . and from Steve Forbes, in his ''Fact & Comment'' column in the November 3rd issue of Forbes magazine:

''The Wall Street Journal recently ran a story entitled 'Devaluation Gains Currency,' which began with this sentence: 'The world's export engines are sputtering, putting new pressure on many nations to weaken their currencies to jump-start their economies.'

That tactic worked so well -- not -- in the early 1930s, when slumping nations desperately engaged in wholesale devaluations, a phenomenon dubbed 'beggar thy neighbor' at the time.  That miserable experience led to new post-WWII institutions that were created to prevent such a calamity from happening again.''

''When monetary policy strays from maintaining a strong currency and dealing decisively with the occasional financial panic, mischief always results.

The sobering danger in this is not the lost economic growth but the political consequences that arise when democracies appear to be floundering and the days of progress are perceived to be largely over.  These circumstances are a breeding ground for tyrannies.''

Last update: Oct 31, 2014 11:45:00 AM

This is not a recommendation to buy or sell.