• Greece is faltering and has no government. Is pulling out of the Euro next? France is being run by socialists. Germany’s Merkel is also having election problems. JP Morgan Chase takes a huge trading loss. But was it hedging or proprietary trading? Bond prices are breaking out (yields breaking down); the US$ Index also appears to be breaking out. Will this take gold prices lower?

• US stocks fell this past week because of Greece and then the shocking loss at JP Morgan Chase.

• Bonds broke out because of Greece. And so did the US$ break out. But will they hold? Will Greece withdraw from the Euro? Will it be a messy withdrawal or a controlled withdrawal? A messy withdrawal and bonds and the US$ could spike. A controlled withdrawal and they could rise the fall just as quickly.

• Gold could be impacted by a Greek withdrawal from the Euro. But signs are growing in behind that gold (and silver) are near a bottom. If a further drop is coming for gold (and silver) it could be washout spike so don’t sell into that. It would instead probably prove to be a buying opportunity. The gold stocks made new lows but on Wednesday they put in an outside reversal day (possible key reversal day). The reversal day needs to be confirmed.

• Oil prices fell but natural gas (NG) prices rose to their best levels in weeks. But the energy stocks follow oil and energy stocks fell on the week.

• The TSX dominated by the commodities of metals, gold and oil fell on the week.

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Stock of the Week – Stepping into the beaten down gold stocks

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• The stock markets fell this past week on fears that the global economy was slowing. The nonfarm payroll came in sharply below expectations at 115 thousand when the market expected 140 thousand. With the labour marke in Europe also deteriorating the outlook is becoming more cloudy. There are many pundits who believe that this pullback in US job growth is only temporary. On the other hand a weakening economy might prompt the Fed to act once again with QE. The European situation is precarious with austerity programs causing unrest and with elections this weekend in France in Greece there could be changes to governments that are not in favour of the austerity programs. The corporate sector in Europe in particular is highly leveraged and they would come under stress as the austerity programs increase the unemployment rate.

• US bonds rose in response to the weak job numbers and were also up as other economic numbers were weaker than expected. There are some thoughts that QE might once again be necessary.

• Gold and silver fell this past week but they jumped from the weak job numbers as it suggested that QE could be back on the table. The jump in gold prices was surprising on Friday given the US$ also jumped higher that day. The US$ was responding to the elections in Europe and there was a rush into US bonds that helped push the US$ higher. Gold going higher even as teh US$ goes higher is an interesting divergence. The gold stocks were hammered and made new lows. That market has never been so low in relation to gold.

• Oil prices fell as a result of the weak job numbers, the ongoing turmoil in Europe and its weakening economies and that the Iranian talks continue apparently positively. Dissension in Israel also helped lower oil prices as the risk of an attack on Iran lessens. Natural Gas prices rose again.

• The TSX Composite fell on the week as it was led lower by weakness in Metal and Gold stocks. There were no winners this past week amongst the TSX sub indices.

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Stock of the Week – A junior gold miner

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