Stock of the Week – Junior miners on the upswing

D.C.

• The big news on the week was the announcement by Fed Chairman Ben Bernanke that interest rates would be kept low until 2014 and that there was now the real possibility of a new round of QE.

• This sparked a rally in the stock market, the bond market and the gold market.

• The stock market faltered at week’s end as economic numbers came in weaker than expected.

• Bond remain below recent levels and a failure to break to new highs could instead see a sell-off in bonds rather than a further rally. There are, however, some expectations of interest rates falling lower with projections of 1% for US 10 year Treasury notes.

• Gold, silver and the gold stocks enjoyed a strong up week. QE and low interest rates are music to the gold markets ears.

• The US$ was the victim of the announcement as it fell and the Euro rallied despite downgrades of Italy and Spain by Fitch. However, some expectation of a debt agreement with Greece and lower rates at bond auctions for Italian and Spanish bonds helped.

• The events in the Gulf remain in the background. But there is another existential threat in that Iran is moving away from accepting US$ for settlement for its oil. This would help Iran get around US sanctions. But it is also a threat to US$ supremacy as the world’s reserve currency. Some have tried that before. **Important must read**.

• Oil prices rose and natural gas bounced back. The energy stocks were mixed. Tension in the Gulf should help keep a bid on oil prices.

• The TSX Composite was up on the week but it was gold, energy, materials and metals that led it higher. All other sub indices were down on the week underscoring weakness in the market.

Note: I am away this coming weekend, however, I will be attempting to put out at least a shortened TC although it may not have the charts and may come later.

D.C.

Stock of the Week – The overlooked precious metal and its representative in North America

D.C.

• For the third consecutive week of 2012 the stock markets closed higher. The markets also closed over 1,310 an important resistance point. If the markets can hold this level this coming week then the odds increase that the market would move higher. This is fitting with cycles that show the first quarter could be positive. The question is will a short covering stampede get underway that could in theory push the markets back to the 2007 highs?

• As the stock markets rose (risk on) bonds sold off. An improving situation in Europe and better than expected economic numbers helped push bond yields higher (prices lower). The Cdn bond market also sold off and a stand aside signal was seen for the bond model system.

• Gold and silver were up on the week but the gold stocks sold off. This is a divergence. The gold stocks were also lower despite an up week in the markets. Someone is wrong. The question is who. Based on other observations it could be gold stocks. The US$ sold off as the situation in Europe improved. Could the US$ be topping?

• Oil prices sold off as it reacted to slower growth in Europe and a drop under 50 for the important Chinese manufacturing index. This indicates a possible slowing in China. Natural gas prices fell once again to new lows. Too much supply and warm weather. NG prices are back where they were in 2002 and not far from 1999 levels.

• The TSX Composite was up on the week despite the weakness in the golds. Most of the sub indices were up on the week.

D.C.

Stock of the Week – an overlooked REIT?

D.C.