Market Wrap
Week Ending 8/28/09
The Economy
Congressman Ron Paul continues his relentless fight for freedom and liberty. The man is simply amazing. Words cannot express his actions. Here are three bills he recently introduced.
- HR 3395: The Health Freedom Act
- HR 3394: The Health Information Protection Act
- HR 3396: The Congressional Responsibility & Accountability Act
The first two health bills can be read about here: Dr. Ron Paul Introduces Health Freedom Bills!
And the second is available in full here: Congressional Responsibility and Accountability Act.
Palladium
We are starting the precious metals off this week with a chart of palladium. Why? - as the chart shows, palladium rises from the lower right hand corner of the chart to the upper left hand corner - to a new yearly high: a bullish signature.
Palladium's bullish posture should bode well for the other metals, which will likely follow suit. In all rallies, one of the metals is first to begin the move. It is fascinating that palladium is the leader.
I could speculate ad nauseam as to “why” palladium is moving up, but it would all be pure conjecture.
Perhaps it's because it fell so far. Maybe the world economy is improving and the demand for palladium is increasing compared to supply.
Personally, I give the most credence to international hot money flows looking for a place to park.
Gold
Gold gained $1.20 for the week (+0.13%) to close at $954.90. As the chart below shows, gold has been trading sideways (consolidating) for months now.
A symmetrical triangle has formed and price is getting compressed tighter and tighter. Soon it will be forced to break out above, or down below its trend lines.
The weekly chart shows the inverse head & shoulders formation still intact. As long as the low of the right shoulder is not violated, the set-up exists, but needs to be fulfilled and confirmed.
The best seasonal period for gold is about to begin (fall to winter) and many in the gold community are expecting a rally to start, which very well may happen.
So, I ask the question: what would throw most off the bulls back? A hard move down to test the lows of the right shoulder comes to mind.
Silver
Silver performed much better for the week, adding 0.55 cents or +3.88% to close at $14.72. A positive MACD crossover occurred on the daily chart. If overhead resistance can be broken above and sustained, a nice rally may be forthcoming.
Platinum
Platinum is testing support at its lower trend line. Since last Nov. prices have moved from the bottom right hand corner of the chart to the upper left hand corner - a bullish signature.
A series of higher lows have been put in place. Now, a higher high needs to occur. Overhead resistance is marked by the horizontal white line.
It is interesting to note that palladium has taken over the leadership role from platinum. What it means I have no idea. Then again - they only pay you if you're on the right side of the trade; you don't get paid any extra for knowing why.
Gold Stocks
Gold stocks are starting to perk up a bit and had a pretty good week. The GDX was up just under a dollar (+2.24%) to close at 40.18. It is interesting to note that the gold stocks outperformed the physical metal this week.
The daily chart below goes back into 2008. It shows that the GDX broke above overhead resistance in late May, broke below it again in July, and has now broken above it once more, consolidating sideways in a compressing symmetrical triangle.
A series of higher lows have been put in place all year - now a higher high needs to be put in to validate the next leg of the bull market. The chart looks promising; however, I'm concerned that the gold stock sector is exposed to overall stock market risk.
The stock market is overextended and if a correction occurs, it could take the gold sector down with it. It is also possible that the gold stocks move counter to an overall stock market decline. Anything is possible.
The Hui Index has also formed a symmetrical triangle and price action is compressing. An outside reversal occurred on Thursday and there was follow through on Friday.
MACD has made a positive crossover and RSI is turning up. Overhead resistance is marked by the upper falling trend line (black diagonal line) and by the upper Bollinger Band (377.78).
Once again, a series of higher lows are in place; however, the August highs need to be bettered and then the June highs, and there is still further work after that.
The above excerpt is a small sampling from the latest full-length version (33 pgs) of this week's market wrap report, available only at the Honest Money Gold & Silver Report website. All major markets are covered with the emphasis on the precious metals. The markets are at important inflection points and there will be some big winners and losers just ahead. A free trial subscription is available by submitting a request to: dvg6@comcast.net.
Stop by and check out the myriad forms of information available, not only on investing, but on the history of gold and silver money as mandated by the Constitution, which is the answer to the present financial crisis, and one's own personal financial protection. In today's turbulent times, the return of your money may be more important than the return on your money.
Good luck. Good trading. Good health, and that's a wrap.
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