CDNX and Gold
The CDNX continues to lack direction though the signs late last week were quite bullish…what seems to be happening is that the Venture is basing out in preparation for an uptrend that we’re convinced will occur…our BMR technical analyst gave some good advice this week…”one big lesson I’ve learned over time in studying TA is don’t tell the markets what to do,” stated John, who added he had to remind one of his friends to stop ‘talking to his charts’…in otherwords, the market will do what it wants to do and when it chooses to do it…the CDNX charged higher in the early hours of trading Monday morning, almost touching 1500 (1498), then suddenly reversed as Gold unexpectedly turned negative…the CDNX found support at 1450 and closed the week on a positive note at 1459 with a 7-point gain Friday…volume continues to be light…there have been only 4 100+ million share days in June…every single trading day in both April and May featured over 100 million shares with the exception of the final 2 days in May…there are fewer buyers at the moment rather than more sellers…we saw declining and light volume in June of last year before activity picked up significantly in July, so history could be set to repeat itself…Gold finished last Friday at a new record high, took a dive on Monday and then headed north again later in the week…it hit a new all-time high Friday of $1,259.50 before closing at $1,255.70…as we stated last Friday, it seems quite clear that Gold is headed to at least $1,300 and perhaps as high as $1,350 over the short term (anytime over the next few months) based on technical factors alone…fundamentally, the market was encouraged today by the fact that the new U.S. financial regulation bill allows investment banks to remain in the gold business as they’ll still be able to use 3% of their funds to trade the market…they’ll also be able to use credit default swaps in “safe” assets like gold to hedge risk…what will be important is to see in the near future is if the TSX Gold Index can break out to a new all-time high and therefore finally confirm the new high in Gold…the Index closed at 387 Friday, just 9 points shy of the all-time high when Gold ran just over $1,200 early last December…the TSX Gold Index is at the same level now as it was in early January, 2008, when Gold was trading at only about $850 an ounce…
