As long-term interest rates in the U.S. continued to rise last week, the stock market put in worse performance in about three months. The Dow Jones Industrial Average was down 1.4% for the week, the S&P 500 down 1.3%.

With interest rates rising in the U.S., the fear banks would be caught in a profit margin squeeze spooked the markets and sent the prices of most financial stocks down. The biggest U.S. banks, like Citigroup Incorporated and Bank of America, saw their stock prices "hit" this week.

My concern is that as the reality of higher interest rates and the pathetic housing market start to be discounted by investors and consumers, consumer stocks will be the next to come under price pressure. Mortgage payments for many Americans are rising quickly as interest rates rise and old "low-priced" mortgages are reset to higher rates. As that happens, consumer spending eases, slowing the economy further.

Looking ahead, I see more difficult weeks for the stock market. In fact, the week we just had might be paltry compared to what's in store for us. Keep an eye on the consumer stocks, as the next soft action will be there.

I continue to see gold producer shares as a bargain. With gold basically in a trading range for the past year, I expect to see gold bullion prices rise as interest rates rise. Investing in gold stocks over the past five years has been a very patient buy-and-hold play. But the strategy has paid off for investors willing to be patient.

NEWSFLASH-Construction of new homes fell in 2.1% in May according to the U.S. Commerce Department, while a new survey of home builders shows builder sentiment fell to the lowest level in 16 years. The carnage in the U.S. housing market continues, but we haven't hit bottom yet.