Newsroom

The Week in Review – July 5, 2010

July 5, 2010

This week marked the end of an abysmal second quarter. The Dow Jones Industrials ended the quarter down 10 percent, which means it ended down in both January and June. Here is an interesting statistic for you: going back to 1900, the Dow has closed down in both January and June, 26 times. 21 of the 26 times this has occurred, the Dow has also closed down for the entire year.

On Thursday the media began discussing the possibility of a “Death Cross”. The “Death Cross” is when the 50 day S&P 500 moving average crosses beneath the 200 day moving average. Most analysts view the event as a signal that the market will keep moving lower.

On Wednesday, the US House of Representatives approved the financial reform bill, commonly referred to as “FinReg”. Democrats had hoped to get a bill on president Obama’s desk for him to sign prior to the July 4^th holiday, but that is not going to happen. The US Senate won’t be taking steps to pass the measure until at least the week of July 12^th. The measure is expected to pass the Senate, but there are some key items missing in the reforms and many are calling the current version “useless”. The bill does nothing to address Fannie Mae and Freddie Mac, which own half of the mortgages of the embattled housing industry, and many think the measures included will only tighten credit, squeezing consumers and businesses that are already desperate for credit even further.

Initial claims for unemployment reversed course last week and rose higher. Economists had predicted that the claims would decline for the second week in a row, obviously, they were wrong. For the third time, Republicans successfully blocked a bill to continue providing unemployment checks to those whose benefits are expiring. The bill was once again blocked due to the fact that it will add to the ballooning national debt. Congress will be heading home for a week long holiday, leaving over 1.3 million unemployed with no benefits. Friday’s jobs report only reinforced that the recovery seems to be losing steam. The US economy lost more jobs than expected, and although unemployment dropped to 9.5%, many feel that figure is not accurate since those who have given up and are no longer trying to find a job are not counted in the figure.

Pending home sales data followed in lockstep with last week’s horrible housing data despite mortgage rates that are at 50 year lows. Pending home sales dropped 30% in May, hitting a new record. Economists, who’ve been building a pretty reliable record for being wrong lately, had expected a much smaller 12.5% decline. In a separate statistic, one third of all home sales that actually do make it to closing are on foreclosures.

US manufacturing activity fell to its lowest level in six months and a report out of China showed that the pace of Chinese manufacturing growth also slowed in June.

Wednesday Moody’s announced that it was placing Spain on review for a potential downgrade from its current AAA status. Moody’s, the final major rating agency to maintain a top rating for Spain, announced that the possible downgrade reflects “deteriorating short-term and long-term economic growth prospects” for the country. On Thursday, Moody’s downgraded 5 individual regions in Spain saying that their “outlooks were negative”.

The US Congress will not be passing a budget resolution this year. House Majority Leader Steny Hoyer said that “It isn’t possible to debate and pass a realistic, long-term budget until we’ve considered the bipartisan commission’s deficit-reduction plan, which is expected in December. I believe that Congress must take up and vote on that plan.” The House Republican leadership had this to say in a “mock” cancellation notice: “We regret to inform you that the congressional budget planned for fiscal year 2011 has been cancelled due to Washington Democrats’ out-of-control spending spree.” With no budget in place, Congress can continue spending like the proverbial drunken sailors, with no metric with which the public can gauge the damage.

Crude oil still seems to be bound within the mid $70 a barrel range under pressure from slowing economies in both the US and China and the still uncontrolled blowout in the Gulf of Mexico.

Oddly enough, the Euro managed to gain some ground on the US Dollar despite the downgrades in Spain and the ongoing Sovereign debt issues that continue to plague the Eurozone.

Friday to Friday Close

	June. 25th	July. 2nd	Net Change
Gold	$1255.00	$1207.00	(48.00) – 3.82%
Silver	$19.10	$17.68	(1.42) – 7.43%
Platinum	$1570.00	$1495.00	(75.00) – 4.78%
Palladium	$477.00	$426.00	(51.00) – 10.69%

Month End to Month End Close

	May. 31st	June. 30th	Net Change
Gold	$1216.00	$1245.00	29.00 + 2.38%
Silver	$18.41	$18.65	0.24 + 1.30%
Platinum	$1551.00	$1530.00	(21.00) – 1.35%
Palladium	$463.00	$442.00	(21.00) – 4.54%

Year to Date Close

	Dec. 31st, 2009	June. 30th, 2010	Net Change
Gold	$1098.00	$1245.00	147.00 + 13.39%
Silver	$16.95	$18.65	1.705 + 10.03%
Platinum	$1470.00	$1530.00	60.00 + 4.08%
Palladium	$407.00	$442.00	35.00 + 8.60%

Here are your Short Term Support and Resistance Levels for the upcoming week.

	Gold	Silver
Support	1200/1175/1160	17.60/17.40/17.00
Resistance	1215/1225/1250	18.00/18.20/18.50

	Platinum	Palladium
Support	1480/1450/1400	425/400/380
Resistance	1520/1550/1600	440/450/475

Volatility should be expected to continue. As stock markets and global economies continue to struggle, those who have overextended themselves in other markets may soon be, or may even already be, unwinding their precious metals positions to try to generate some cash in an attempt to minimize damage. The astute investor would take advantage of any price dips brought about by such actions to add to, or begin, their own precious metals portfolios. The manipulation in the precious metals markets that has been taking place for years is becoming common knowledge and is beginning to be acknowledged even by those who previously dismissed such reports as nonsense. A much larger than normal percentage of COMEX silver contract buyers are asking for physical delivery of their product, which may lead to a shortage of silver in the COMEX warehouses in the near future. If that happens, silver prices may explode, and gold won’t be far behind it. Remember, the key to profitability through the ownership of physical precious metals is to actually own the physical products and to hold them for the long term. Never over-extend your ability to maintain ownership of your product over the long term. .

Trading Department – Precious Metals International, Ltd.

This is not a solicitation to purchase or sell.

© 2010, Worldwide Precious Metals.
www.wwpmc.com

The Week in Review – July 5, 2010
Posted by Worldwide Precious Metals on Monday, July 5, 2010

As featured on: