Red-Hot Resources

"Luck is not chance, it’s toil; fortune’s expensive smile is earned.”

Friday, June 15, 2007

TNotes and Commodity Stocks

I've explained in earlier posts how the rise and fall in interest rates seems to be affecting commodity stocks, particularly small-cap commodity stocks. As interest rates go higher the supply of cheap money dries up, and investors fear this will hurt miners, oil explorers, etc.

The good news is we saw Treasury bonds bounce hard yesterday (bonds move inversely to yields). However, I'm not ready to buy yet. That's because we often see a "double bottom" in bonds. Looking at the weekly chart below, you can see bonds rarely bounce without going back and testing that previous low ...
That doesn't mean there aren't bargains out there in gold and silver miners ... we might just get a better buying opportunity.

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