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CFTC’s Chilton Assures Silver Price Manipulation Probe Not Over

A report Monday that the Commodities Futures Trading Commission (CFTC) would drop its four-year-old probe on silver price manipulation may have been premature.

According to The Financial Times, the CFTC was supposedly unable to find enough evidence to support the claims after reviewing 100,000 pages of documents and interviews.
But Bloomberg News reported today (Wednesday) that CFTC Commissioner Bart Chilton said silver price manipulation did occur, and he's intent to find it.

"I continue to believe, consistent with my previous statements and information from the public, that there have been devious efforts related to moving the price of silver," Chilton wrote to Bloomberg. "There have also been silver and gold market anomalies outside of the silver investigate window that have raised, and continue to raise, market concerns."

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Summer Slump in Silver Prices Closer to an End

Silver prices have suffered this year as the white metal has lost its luster as a safe haven investment, but the pullback has slowed and may be bottoming out.

Cash has gained some allure over metals, but according to FX Empire, as bullion prices near support levels buying interest has been on the rise.

In July, silver prices broke out from a three-month price slump and closed up 1.1% to $0.302.This came after fourth months of consecutive losses: 0.5% (June), 10.5% (May), 4.5% (April) and 6.2% (March).

Silver prices ended last week on a positive note, up $0.54 to $27.69. Futures and options players made bullish bets at the end of last week on the commodity based on speculation for additional stimulus from the Federal Reserve.

This week, silver prices have continued their rise. The metal's up 0.3% to $27.84 an ounce.

Can this uptrend continue? Here's what to expect from silver prices in the near term.

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Silver Prices Ready for QE3

Recent economic data might be enough to get the U.S. Federal Reserve to finally commit to more stimulus measures, which in the past has delivered a good run for silver prices.

The United States last week reported economic growth of just 1.5% for the second quarter of 2012, down sharply from the rates posted for the previous two quarters.

As a result, the Dow Jones Industrial Average jumped as traders anticipate more economic stimulus from the Federal Reserve, either at the Federal Open Market Committee (FOMC) meeting this week or when Chairman Ben Bernanke speaks at Jackson Hole in late August.

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Investing in Silver: States Support Move to Metals as Dollar Weakens

Investing in silver and gold has become more attractive since the U.S. dollar just doesn't have the clout it once did.

Fears over where the dollar is headed – especially with continued money printing from the central bank – has pushed safety-seekers into investing in silver and gold. Demand has also pushed gold and silver prices to new highs.

The idea of using gold and silver as an alternative currency has spread as the metals have grown more valuable.

In fact, worries that the U.S. dollar is on the cusp of a collapse have lawmakers from more than a dozen states (up from just three in the past few years) seeking approval from their state governments to either issue their own alternative currency or use gold and silver as a currency for settlement of state-related transactions.

Rep. Glen Bradley, R-NC, who introduced a currency bill in 2011, told CNN Money, "In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System… the State's governmental finances and private economy will be thrown into chaos."

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Silver Prices: Metals Rise on Hopes of QE3

Fresh weak economic data and comments from Federal Reserve Chairman Ben Bernanke have stoked hopes that another round of quantitative easing is on the horizon. Those expectations gave gold and silver prices a boost this week.

Glum retail sales numbers released from the Commerce Department on Monday and high initial jobless claims on Thursday fueled optimism of QE3 despite the lack of hints from the central bank chief earlier in the week. But, Bernanke and his team have clearly left the option of QE3 on the table and stand ready to intervene when they see fit.

The markets' recent spate of lackluster financial reports and escalating concerns over the waning global economy are suggesting a pressing need for QE3 – sooner rather than later.

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You Don't Want to Miss This Opportunity

I recently spoke at FreedomFest in Vegas along with the world's best and brightest minds, such as Steve Forbes, Senator Rand Paul, and Whole Foods CEO John Mackey.

I discussed the growing global demand for resources and gold to a crowd of 2,000.

Half of the group was attending for the first time, which demonstrates to me a growing curiosity to learn about macro trends shaping the world and affecting our investments.

Among investors these days, coming across a fellow commodity bull is about as rare as finding a positive story in the media, especially when you look at the results of metals and natural resources during the first half of 2012.

Only four commodities on our periodic table pulled off a positive return.

Wheat grew the most, rising 13 percent, followed by single-digit rises from corn, gold and copper. On the negative side, coal lost more than 19 percent, followed by crude oil (-14.1 percent), nickel (-13.6 percent) and lead (-12.3 percent).

A Clear Tipping Point for Resources

Fears of slowing global growth and how it will affect commodities have caused many investors to dig their heels in the ground and resist owning natural resources. Perpetuating this negative investor sentiment is the constant 24/7 news cycle punctuated with pessimism.

During a natural resources conference, Jeremy Grantham of GMO pounded the table for an investment in resources, but you wouldn't know it by reading the headline of the CNN piece that covered the topic.

In its article called, "Our planet will truly be toast," CNN discussed Grantham's comments on a global commodities shortage, saying he was "bearish on human resources…but bullish on natural resources investments."

His argument focused on the swelling population in China, and the fact that the world had experienced a "great paradigm shift" around 2000, when commodity prices, which were negative for decades, "abruptly reversed course." He told the crowd, "in the long run, you can't afford to miss this opportunity." We agree.

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Commodity Stocks: High Yields and a Hedge Against Inflation

For years now I've been pounding the table on two big themes…

The first is that income investing is a great way to boost not only your returns but your cash flow. And second, that every investor should have a substantial chunk of their portfolio invested in commodity stocks.

Here's the good news: it is perfectly possible to combine the two strategies, earning the benefits of both worlds.

In fact, in a moment I'll tell you about a few of my favorite high-yielding commodity stocks. Two of them pay safe, hefty yields over 7%!

Compare that to what you can earn with your local bank or with U.S. Treasuries. You'll quickly find there is nothing comparable.

In fact, by investing in income-producing commodity stocks, you get a steady stream of income along with the best possible protection against the ravages of inflation.

That combination is tough to beat. Let me explain…

The Best of Both Worlds: Income and Appreciation

The truth is, income investing is crucial for three reasons.

The first is obvious. No matter how well-off you become, the bills just keep getting worse and worse. I never met anyone that couldn't use more cash.

The next two aren't nearly as evident to most investors– even though both are of the utmost importance to their portfolios.

Stocks that pay steady, consistent dividends add a measure of certainty to share prices. It's why top quality dividend stocks typically do well even in bear markets. Conversely, since earnings are so easily manipulated, companies with fancy bottom lines but no dividend usually turn out to be a scam and end up being priced accordingly when things turn south.

Finally, dividends themselves keep management honest (or fairly honest.) Cash that is paid out to shareholders cannot be used for grandiose expansion plans, or to pump up the stock price to help inflate top management's stock options.

As a result, companies that pay decent dividends are less likely to suffer value-destroying scams than those that don't and are likely to be around longer. For investors, that offers stability — invaluable these days.

As for commodity stocks, I'll be the first to admit they are not a universal panacea. But two long-term factors currently favor them.

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Four Things Suppressing Crude Oil Prices Today

The collapse of talks between Iran and the "Big 6" (the five permanent members of the UN Security Council plus Germany) should have accelerated international crude oil prices.

And yes, they are higher.

But the real spike hasn't hit. Not yet.

The rising crisis atmosphere in the region and the genuine possibility that a fourth round of talks between the two sides will not even take place should have renewed the upward movement.

That hasn't taken place yet, either.

Oil prices are caught between the normal dynamics of geopolitical concerns – which push prices north – and continuing concerns over a global economic slowdown – which results in lowering expectations.

Now, this limbo is a delicate balance; it could change in a matter of hours.

We are likely to see a short-term rise Monday evening if the Norwegian oil and gas sector strike is not averted. Labor negotiations between Norway's oil workers and employers over pay and pensions failed – yet again – yesterday. The country is now just hours away from the first complete shutdown of its oil industry in decades. (Already, the strike has cut oil output by 13%, according to Reuters.)

Then there are the figures coming out from the Energy Information Administration (EIA) on Wednesday, which will almost certainly show a drawdown on U.S. inventories. Normally, that would also push up prices.

However, absent an Iranian move against the Strait of Hormuz or a major refinery accident somewhere in the world, the rise will be less than usual.

That's because right now, four things are tempering the oil price rise:

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Higher Gold Prices Triggered by Europe

In early trading Friday, it was like old times again – gold prices soared and it was well overdue.

The yellow metal glistened in early trading, with gold for August delivery rising 3%, propelled above the key $1,600 level. Fueling the strong gains in gold and other markets were encouraging words out of the European Union summit.

As the pivotal two-day meeting in Brussels wound down, global markets and commodities rallied after EU leaders struck a "breakthrough" deal to ease the recapitalization of banks. The plan was aimed at pulling the Eurozone back from the edge of its debt crisis.

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While Banks Crumble, The Next Leg Up For Gold Prices Draws Near

Something's afoot in the world of high stakes finance.

The Basel Committee for Bank Supervision (BCBS) is about to decide something crucial to bankers, sovereign nations, and gold investors alike.

As part of the Bank of International Settlements (BIS), the BCBS is reviewing the upcoming new Basel III rules. That may sound arcane to you but I promise it's not.

Though rarely discussed in the mainstream press, the all-important Bank of International Settlements is essentially a global central bank to the world's central banks.

Its goal is ostensibly to provide global stability to the monetary and financial systems.

And in a surprise twist that only a few years ago would have been considered preposterous, the BCBS is entertaining whether gold should qualify as a full-fledged Tier 1 capital asset.

Currently, the precious metal is relinquished to a Tier 3 status, deserving no more than a 50% weighting at that.

Here's why that distinction is important and potentially astonishing.

Achieving Tier 1 status would credit gold with the recognition it's been denied ever since Nixon closed the gold window on August 15, 1971.

In essence, it would mark the official recognition that gold is real money.

But that's not the only reason gold is gaining respect. Other factors are brewing that will set the stage for the next leg up in gold prices.

As Banks Teeter, Gold Gains Respect

One of them is the crumbling state of world's banks. Once unwavering, the trust in these financial ivory towers is precarious at best.

In the last couple of months alone, Greek depositors have withdrawn billions of euros in deposits, as the fear of a "Grexit" looms large.

Not to be outdone, Spain banks have been emasculated by the Iberian nation's own bursting real estate bubble. After denying for weeks that a bailout would be required, officials finally caved to a "Spailout", giving Spain's banking system a 100 billion euro rescue package.

This phenomenon is not exclusive to the Eurozone either.

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