This week…

• The S&P 500 continues its recent rise and objectives up to 1,450 and even 1,525 remain possible. But the risks are mounting with the LIBOR scandal and the potential for an expansion of war in the Mid-East and tensions rising further in the South China Sea. Which one triggers a stock market is anybody’s guess. And of course it could also be nothing happens. But with negative cycles kicking at least after October 2012 odds appear to favour something going wrong.

• Bonds fell for the 4th consecutive week as the risk-on trade continues (sell bonds, buy stocks).

• Gold prices were off slightly this past week and remain below strong resistance. However, the gold stocks enjoyed another up week and may be leading. The gold stocks appear poised to break out. Platinum had a big up week thanks to the strike at the Lonmin mine in South Africa where police opened fire on strikers killing upwards of 3 dozen.

• Oil prices were up again as US supplies continue to dwindle and war talk in the Mid-East is spooking investors afraid that an attack on Iran by Israel could trigger a broader war and soaring oil prices.

• The S&P TSX Composite rose to its best levels since May 2012 as rising gold, energy and materials helped push the index higher.

Next weekend I leave on a week-long canoe trip in Algonquin. As a result an email will come out with a brief update but no full report. The following weekend could also see an email update although if we get back in time we will attempt to complete a short technical commentary update. An email update contains no charts.

D.C.

Chart of the Week – Silver demand/supply

Stock of the Week – A junior silver producer

D.C.

This week…

• The S&P 500 is up now for 5 consecutive weeks. Signs continue to abound that potential objectives up to 1,450 and 1,525 could well be seen. The key breakdown zone is at 1,360. While dangers in the market are everywhere the market continues to rise on the expectations of more stimulus (QE) from the world’s central banks. Don’t fight the Fed even if the Fed continues to be coy about whether they will bring on another round of QE. TC continues to note the growing dangers for war in the Mediterranean, the Persian Gulf and the South China Seas.

• Bonds slipped again this past week but don’t expect a major decline. However, US bonds are close to at least a breakdown of $10 or so. Bonds are slipping as the stock market rises as safety is being sacrificed for some risk.

• Gold prices (and silver) rose again this past week. Both continue to appear to be forming bottoming patterns that could soon breakout.

• Oil prices crept higher once again this past week. The key breakout level is at $108 and if the market does breakout over that level it could see objectives up to $146. The catalyst for a major breakout is the threat of war. Articles appeared in major newspapers this past week suggesting that Israel might attack Iran prior to the November elections. If true it could unleash powerful unintended consequences that plummets the world into a more dangerous war involving the great powers.

• The TSX Composite enjoyed an up week as well led by commodities – gold, energy and metals.

D.C.

Chart of the Week – Gold supply and demand.

Stock of the Week – Another junior gold producer

D.C.

This week…

• The Fed and the ECB spoke and once again both failed to commit to a new round of QE except to say that they will do what is necessary and that the ECB would defend the Euro.

• However, the Germans looked the other way and it was now suggested that the ECB would buy Spanish bonds. The US$ fell, the Euro rose and oil jumped. Then came the unexpected jump in the nonfarm payrolls for July and the stock markets soared, oil leaped, gold reversed, bonds fell and the US$ swooned.

• It was a week of reversals as the stock market, gold and oil all reversed losses from earlier in the week and the US$ and bonds reversed gains that were seen earlier in the week.

D.C.

Chart of the Week – Gold to $4,500?

Stock of the Week – It’s a COW.

D.C.