There wasn’t much to comment on in gold and silver action in the Far East until London opened for business on Wednesday. Then prices rose until the London silver fix was in at 7:00 a.m. New York time. Then both metals got sold off. The silver price bottomed a couple of hours later, but gold worked its way down slowly to its low, which was almost at the end of regular trading in New York.

The Daily Reckoning’s Bill Bonner says the biggest credit expansion ever could now be turning into the largest credit contraction. Big mistakes were made in all quarters of the economy, and these take time to correct. Bill says he still favors gold over other asset classes, given the enormous downside potential for the U.S. dollar.

1-2-3 Trader editor Jim Stanton says commodity ETFs are riding the three-point waves of a downturn. After the first trough, the stock stages a small rally, before heading back down. This pattern provides good buy and sell signals for resource investors. Jim says ETFs United States Oil Fund (AMEX: USO) and United States Natural Gas Fund (AMEX: UNG) have further short-term corrections ahead, meaning an opportunity to go short.

If you own gold or are thinking of buying gold, David Galland’s latest article for The Daily Reckoning is a must-read.

Gold is starting to climb northwards from its nine-month low reached on August 15. But at just under $832 an ounce this morning in London trade, the yellow metal is still way off its March high of  $1,032.70.

Dave says two important events mean the recent setback in gold prices will not last long. The first of these is soaring inflation in the U.S. - which, if calculated by pre-Clinton metrics, is now running at 13.6%. The second is the failure of the euro as an alternative to the dollar…

There’s plenty of bullish sentiment around commodities here at Contrarian Profits.

Byron King says gold and oil prices are experiencing a correction, not a trend reversal, and that the long-term prospects for these commodities are bullish.

Euro Pacific Capital president Peter Schiff goes even further. He reckons the outlook for gold and oil has never been brighter. That’s because the current dip in commodity prices - and the dollar rally - is a market ‘fake’ that Wall Street has bought into without a rationale. The fundamentals simply don’t support it…