All asset classes but Bitcoin, coffee, JPY, and mining stocks were higher this week.
Bitcoin ended a wild week down 38.7% at 1693 mg, after trading has high as 5,253 mg and as low as 1,099 mg. Friday had the largest volume ever traded for Bitcoin, over 964 kg. As I forecast last week, this kind of price action is to be expected in such a thin market as new buyers enter in quantity. Over the weekend, BTC has recovered to 2,051 mg. Keep in mind that BTC could fall to 500 mg or so and still be in an exponential uptrend! Expect further volatility.
The HUI gold miners closed on a new 12-year low of 6.1 g, down 6.2%. This failure of the long term support at 6.5-6.8 g is worrying, as there is really no support below but the old low of 4.2 g set in 2000. I would not be surprised to see the old low retested. If you are using trailing stops, follow them closely. Make volatility your friend by selling put options on shares you'd like to own.
The government-issued currencies were mostly higher, led by the EUR which rose 4%. The exception was the JPY, which lost 2.9% to close at 203 µg as details of the government's plan to double the Japanese money supply were absorbed by the market. The USD gained 2.1% to close at 20.3 mg, and rose further in late New York trading to 21.1 mg. This puts it at an all-time high of 28% above its half-life curve. In 2005 and 2008 these levels proved unsustainable, and marked the perfect opportunity to sell dollars (and stocks and bonds) and buy gold, mining stocks and other hard assets with an eye to taking profits in about a year. All the pieces are now in place to make this strategy a winner once again!
Bonds where higher, with the short term SHY gaining 2.1% (in line with the USD, as usual), while the long term TLT rose 1.4% to close at 2.47 g. TLT spent most of the week below its resistance line, but closed above it on Friday, an indecisive showing. I continue to watch for signs of a new bull market in treasuries, but note that we are approaching long term resistance at 2.55 g, which may limit upside potential.
Commodities were mostly higher, with coffee, off 1.5%, the sole exception. Silver gained 3.7% to close at 0.555 g, offsetting most of its loss from last week, while copper rose 1.8% to 67.5 mg/lb. Platinum gained 1% to close the week 1.4% below parity with gold.