Market Update 26 Jul 2013: Gold Stock Rally Continues

Most markets were sharply lower this week; the exceptions were bitcoin, gold stocks, and silver. Most significant was the rise in the HUI gold stock index, which climbed all the way to 6.1 g before closing at 6.0 g, 15% above its recent low.

The government-issued currencies were all weaker, led by the USD, which declined another 2.6% to 23.4 mg, leaving it 49.4% above its half-life curve. The CAD and EUR were the least weak, losing 1.6% and 1.8% respectively. Bitcoin stabilized this week, climbing 2.1% to close at 2.25 g. Trading was very quiet, with only 30 kg worth of BTC changing hands – a far cry from the 535 kg we saw during the Cyprus banking crisis last April.

Bonds were lower, with the short term SHY losing 2.6%, in sync with the underlying USD, while the long term TLT fell 3.6% to close at 2.53 g, just below support at 2.55 g. This is a crucial point for TLT, as it sits both at a long-term support/resistance level, and at the bottom of its upward trending channel.

Most stocks declined again, with the Nikkei down 5.5% and the S&P 500 off 2.7%. The HUI Gold Bugs Index was the only equity advancer, adding another 3.6% to close at 5.98 g. This extends the rally to resistance between 6 and 6.25. If the HUI can clear this hurdle, the next stop is long term resistance at 6.8.

Silver was the only commodity that didn't fall this week, adding 0.4% to close at 0.47 g/oz, little changed. Crude oil led the decliners, falling 5.7%, followed by cotton and copper, each down 3.9%. Platinum dropped 2.2% to close at 33.4 g/oz, now 7.3% above gold parity.