This week most markets made gains, with the exception of gold stocks. Coffee and Bitcoin were especially strong.
Bitcoin rose 7.2% to close at 2.76 g. Trading volume has been declining for the last several weeks. It is encouraging that the seizure of Mt. Gox US bank accounts by the DHS did not spark a selloff. Still, expect continued volatility!
Among the government currencies, the JPY was weakest, gaining 1.3%, while the USD was the strongest, rising 4.2% to close at 22.7 mg; this is 40.6% above its half-life curve, and continues to present an excellent selling opportunity for those still holding USD assets.
Bonds were higher, with short term SHY gaining 4.2% (tracking the underlying USD), while the long term TLT rose 2.7% to close at 2.66 g. This is the bounce off of support at 2.55 that we were looking for last week, so we are now watching for follow-through to surpass the recent high at 2.74 g and signal a breakout that could run to 2.9 g or more.
Stocks were mostly higher, led by the S&P 500, which gained 6.4%. The HUI Gold Bugs Index was the only declining asset class this week, but it was a doozy, falling 8.4% to close at 5.6 g and setting a new low for this move down. This establishes the 6 g level as resistance, with little support in sight until the old low at 4.2 g. It will be interesting to see if future weakness in the USD and a resurgence in demand for gold leads to a dramatic recovery of the HUI, or simply pushes it lower with other stocks.
Commodities were all higher, led by Coffee, the biggest winner of the week, up 9%. Silver was the least changed, gaining 0.4% to close at 0.512 mg/oz. Platinum rose 2.8% to close the week at 33.4 g/oz, now 7.4% above parity with gold, a breakout to levels not seen since August of 2011. Expect to see resistance at 37g/oz.