Market Update 19 Jul 2013: Gold Stocks Bottom?


Markets were mixed this week, with currencies lower and commodities mostly higher. Two things stand out: Gold stocks, which may be making a bottom, and silver, which continued falling to a new low for this move.

Currencies were all weaker, led by Bitcoin, which dropped 6.0% to 2.2 g. For most currencies, this would be a huge move, but for the highly volatile BTC, it was a pretty quiet week, with a trading volume of only 65 kg. The Japanese Yen was the weakest government-issued currency, losing 2.3%, while the Euro was the least weak, declining 1%. The USD declined another 1.2% to 24 mg, leaving it 52.9% above its half-life curve.

Bonds were mixed, with the short term SHY losing 1.1%, slightly better than the underlying USD, while the long term TLT was almost unchanged, adding 0.1%. At 2.62 g, it continues to sit jut above support at 2.55 g.

Most stocks declined, with the Nikkei down 1.7% and the S&P 500 off 0.5%. The HUI Gold Bugs Index was the only equity advancer, adding 5.5% to close at 5.77 g. This puts in place a "higher low", as you can see on the chart below. The big question now is, do we have a bottom, or is this just a little bear market rally?

HUI Gold Stocks Chart

Commodities were mostly higher, but silver and copper bucked the trend, losing 2.4% and 1.5% respectively. Coffee, up 1.6%, and crude oil, up 0.7%, were the strongest in the commodity group.

The drop in copper isn't much of a concern, as the metal has been zig-zagging its way higher over the last few months, making higher highs and higher lows, and this week's action fits nicely with that pattern. Silver, on the other hand, broke down to close at  0.466 g/oz, a new low for this move. Support for silver might be found around 0.46, a level that has been crucial many times since the mid-1990s. But so far, there are no signs of bottoming action.

Silver Chart

Table of prices in gold for week ending 19-Jul-2013

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