Most markets moved higher this week, led by Bitcoin and the Nikkei stocks. The exceptions were silver, coffee, and especially gold stocks, which fell more than any other investment class.
Currencies all rose, led by Bitcoin, up 10.9%, and the Japanese Yen, which gained 3.6%. The USD rose 1.7% to 23.8 mg, putting it 52.3% above its half-life curve. The CAD was the laggard, gaining back the 1.6% it lost in the prior week. Bitcoin trading was a bit more active, with an average 67 kg worth of BTC changing hands each day – about double the daily volume for the previous week.
Bonds were up, with the short term SHY gaining 1.7%, in sync with the underlying USD, while the long term TLT was almost unchanged, adding 0.4% to close at 2.53 g. TLT continues to dither about, staying right at its support and resistance levels. A break one way or the other should be coming soon.
Most stocks were higher, led by the Nikkei, up 6.1%, more than making up for last week's drop. The S&P 500 added 2.7%, exactly reversing last week's fall. The HUI Gold Bugs Index was the only equity class to lose ground, declining 6.7% to close at 5.58 g. This leaves the crystal ball quite cloudy for the gold stocks until they break out above 6.25 g or fall below 5.2 g. If we do get an extended period of sideways trading it could be an opportunity to acquire some longer dated call options at reasonable prices, and if we get a breakdown below 5.2 g heading for a retest of the old low at 4.2 g, check out the possibility of selling some puts on high quality miners you'd like to own.
Commodities were mostly higher, with the exception of coffee and silver. Silver closed the week down 1.2% at 0.462 g/oz, the lowest price seen since 25-Aug-2010, and approaching support at 0.45 g. Coffee fell 1.7%, and is now 16.4% above its all-time low set last December. Crude oil and copper showed the most strength, gaining 3.8% and 3.7% respectively. Note that 2.4 g has been a critical level for crude oil for years, acting as support in 2007, and resistance many times from 2009 through 2011. In june, crude broke out above 2.4 g and reached 2.65 g in early July. This week, crude retested the 2.4 level as support, and bounced smartly off of it to close at 2.54 g. Platinum recouped the 2.2% it lost in the prior week to close at 34.1 g/oz, now 9.7% above gold parity.