Chart courtesy of Stockcharts
Yesterday the DOW penetrated the 8800 mark, which was regarded by many as resistance to further progress, suggesting a continuation of the current rally. This is interesting as the markets appear to be inversely linked to the US Dollar so as the markets rise the US Dollar tends to fall and as it falls $Gold tends to rise.
The rally that started a few weeks ago in the US Dollar appears to be faltering and looks to be set to resume its downward path and test the '72' level before the year is out.
This could bode very well for the gold and silver producers as we have seen today they rose with the general markets. We all remember last year when the dramatic fall in the markets decimated the precious metals sector. If the fear of a market collapse has diminished, at least for now, then the stocks on the HUI could be make good progress on the back of improving gold prices, a rising DOW and a weakening dollar. On the other hand July is historically a bad month for gold as it tends to suffer from the summer doldrums and behave in a lackluster manner. Well gold closed yesterday at $948.90 and the HUI at 362.60, an increase of 15% over the last week or so.
Our stance remains pretty much the same in that we will hold tight to our core position and look for aberrations amongst the stocks that offer a short term trading opportunity.
We don't own any stocks in the general market as we see the contraction of economic activity continuing for some time which will ultimately cap the progress of the DOW Jones Industrial Average. Historically bear markets are characterized by strong rallies and it is indeed possible to make lots of money if you are nimble and get the swings right, for now though it doesn't tempt us.
Have a sparkling day.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.