-- Posted Tuesday, 8 July 2008 | Digg This Article
| Source: GoldSeek.com
Honest Money Gold & Silver Report
Stock Market
Summer is here and vacation starts for many with the Fourth of July weekend. The beach, the pool, and barbecues and family parties are the order of the day. This week’s report will thus be shorter than usual.
The stock market continues down mired in a bear market. Things are getting oversold, however; but at the same time it does not seem as though capitulation has yet taken place. A relief rally should be coming, but another move down may happen first.
On Thursday a sense of changes were detected, as some sectors that have been doing good have now started to give in to selling pressure, the latest victim being the basic materials. This is somewhat of a proxy for commodities, although not a pure play by any means. Oil still remains high and volatile but other commodities are seeing pressure, some more than others. The chart below shows the XLB breaking hard below its lower trend line.
As goes the euro, so goes gold, at least so far and for the time being. It is what it is until it changes. The euro has gapped below horizontal support, which puts a head wind to gold.
Gold
Gold’s daily chart looks eerily similar to the euro, first rallying above horizontal resistance and then back below.
Gold has been acting good, backing and filling and consolidating, however the question remains if it has spent enough time building a strong enough base from which to launch the next intermediate term move. More time may be necessary.
Gann was spot on when he talked of the importance of the time element, and it looks a bit too quick and easy from right here at this time.
GDX
The GDX has not fared as well as physical. It ran into overhead resistance and bounced back down. Gaps below loom large to fill.
The weekly chart shows the index may not be out of the woods. A head and shoulder top may be forming. Price must hold above the lower trend line and break above the upper trend line to invalidate the formation.
In today’s very trying markets return of one’s investment is more important than the return on investment, until the dust settles and the trends can be firmly seen and established. Several markets may be at the crossroads of trend changes.
The Central Fund of Canada holds physical silver and gold, thus it is not exposed to the same risk as are gold and silver mining stocks; nor does it have the same upside potential or leverage. But as a store of purchasing power it is hard to beat.
One tend that unfortunately seems to be in place is that food is getting more and more expensive. The DBA multi-sector agricultural fund is challenging its previous high and has been a strong performer since last year. 
