Market Update 10 May 2013: TLT and HUI Treading Water


This week most markets continued to make gains, with all assets except silver and coffee advancing. Japanese  stocks were especially strong.

Bitcoin rose 33.5% to close at 2.57 g. This more than recovers its drop last week. Expect continued volatility!

Among the government currencies, the JPY was the weakest, gaining 1.3%, while the CAD was strongest, gaining 3.5% to 21.7 mg. The USD was almost as strong, adding 3% to close at 21.8 mg; this is 34.5% above its half-life curve, and continues to present an excellent selling opportunity for those holding USD assets.

Bonds were higher, with short term SHY gaining 3% (tracking the underlying USD), while the long term TLT rose only 1.1% to close at 2.59 g. TLT spent the week hovering near its support level at 2.55 g. We will have to wait a bit longer to see whether TLT bounces off this support and heads higher, towards the 2.8 to 3.0 g region, or falls through support to 2.35 g or lower.

All prices in this discussion (and on the Priced in Gold site in general) are based on the London PM gold fix. On Friday, the fix took place near the lowest price of the day; and gold rallied (AKA the dollar fell) hard thereafter, with the USD closing in New York down 1.5% at 21.48 mg. If this price were used to translate the closes for other assets, they would all be lower by about 1.5%, putting TLT on support at 2.55g (down 0.4%). The only other asset that would move into the loss category was the JPY, which would have shown a 0.2% loss for the week.

Stocks were all higher, led by the Nikkei Index, which gained a stunning 8.1%. The Dow Jones Industrials and HUI Gold Bugs Index were the least strong, gaining 4% each. Although this show of strength in gold stocks is welcome, the chart below puts it in context: the gold stock index is still hovering around 6 g. This period of consolidation could break either way, and even if it heads higher, it will have to get above long term resistance at 6.8 to 7 g to be convincing as a breakout.

TLT in gold

Commodities were mixed, led by Copper, which gained 5.4% to close at 73.8 mg/lb.  Coffee was the weakest commodity, giving back all of last week's gains, falling 4.8%. Silver also declined, giving up 0.7% to close at 0.510 mg/oz.  Platinum rose 2.2% to close the week at 32.49 g/oz, 4.5% above parity with gold.

Table of prices in gold for week ending 10-May-2013

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