This week as been a very volatile and choppy trade in the precious metals. We have watched gold slide from $1058.00 Monday (10/26) to a low of $1026.90 on Wednesday (10/28). That's $31.10 for us Gold bugs doing the math. The economic news has been very U.S Dollar friendly (until today's GDP) therefore negative for the Gold and Silver markets.

This week's economic numbers:

Durable Goods.........U.S Government reported only rose 1%.

New Home Sales......Fell 3.6% unrepentantly...

Home Prices............The Standard and Poor's - Case-Shiller

                                 Home price Index of 20 major cities rose 1%.

Jobless Claims.........530,000 A DECREASE of 1000 *

GDP.......................TOPS expectations.. UP 3.5...

The GDP sent the Precious metals soaring and had economic analysts clamoring that the recession was over...tell that to the 530,000 unemployed U.S. citizens. The Chinese government is still running Television promo's suggesting its citizens protect their new found wealth in hard assets particularly Gold and Silver as a safe haven against world inflation. Meanwhile China's economy 8.9% in the third quarter and this translates into more wealth for its citizens. This should mean the demand for Gold and Silver should remain HIGH. The (WGC) World Gold Council has stated China may pass India as the worlds largest consumer of GOLD. That's quite a statement considering that 12% of all Gold (refined) is in Indian Households. The Chinese citizens have just started to buy Gold as an investment. Let us not forget that 50 years ago it was illegal for citizens of China to own or even have Gold or Silver in their possession. Considering the rapid growth of the Middle Class Sector in China

I believe the demand for both Gold and Silver will be insatiable. India's wedding season is approaching as well as marriage season in China...expect Gold and Silver Jewelry sales to rise in next few weeks..............

Comex 10/13 reported an all-time record 250,000+ NET SPECULATIVE LONG POSITIONS in GOLD........  If you felt the Gold was over-bought... (Numbers agree) ...

Consumer Confidence fell for the second straight month.... This is a porthole to the U.S Consumer. This report is stating consumer doubt concerning the economic recovery.....

When looking for a market to trade it is vital for that market to have 3 components in my opinion.

(1)...History...
(2)...Volume...
(3)...Volatility...  
GOLD IS ALL 3 and MORE!!!

Mike Daly / Gold Specialist