Market Update 13 Jul 2012 – TLT


Most of the strength last week was in commodities, with coffee up 4.3% and crude oil up 2.6%.  The only other strong gains were in TLT, the long term US treasury ETF, up 1.2%.  Stocks and currencies were all down or unchanged for the week. The biggest losers were gold stocks, represented by the HUI, down 5% and the Euro, down 2.6%.

Table of prices in gold for week ending 7/6/2012

I've decided to sell my TLT position, as I'm concerned about the Fed announcements coming on Wednesday.  From a technical perspective, TLT remains in it's upward channel, but is in an area of resistance, shown by the red line on the chart below.

TLT in gold

Fundamentally, I don't see long term interest rates going much lower, but the markets are looking for some kind of additional QE.  With the problems in Europe, continued unemployment worries, and an election coming up, this makes sense… But if the Fed disappoints, it could send a shock through the markets as they go "risk off". If they offer a strong QE program, markets will rise; but in either case, gold will be responding as well, making the outcome uncertain.  I have a 15% profit in my TLT position (at 2.53 grams, up from 2.17) and I'm going to take it and stand aside to see what effects the Fed news releases have.

Filed under monetary universe by  #

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