Weekly Update 29-July-2016
This was a mixed week, with currencies mostly lower, and stocks lower in the US, but higher in Japan and Europe. Crude oil had the biggest drop, falling 7.4%, while the largest gains were in the Euro STOXX, up 5.9% and the gold stocks, which rose 4.2%.
The only rising currency was the Japanese Yen, which gained 0.9%. The biggest currency losses were in the USD and CAD, which fell 1.6% each. Bonds were mixed, with the the short term SHY losing 1.5% (roughly tracking USD cash) while the long term TLT gained 0.4%.
Equities were split between the US, where the DJIA dropped 2.3% and the S&P 500 fell 1.6%, and the Euro STOXX, which gained 5.9%, and the Japanese Nikkei 225, which rose 0.5%. The UK FTSE was off just 0.2% after a huge 7.8% rally the previous week. Gold stocks rose 4.2% to close at 6.36 grams, right at their long term resistance line. The HUI is now up 97% from one year ago, making gold stocks the best performing asset class over that period.
Commodities were also mixed. The big news here was in crude oil, which dropped 7.4%. Platinum and palladium were the strongest commodities, gaining 1.7% each. Silver was almost unchanged, up 0.1%, while copper lost 1.8%.
The Dow Jones Industrials have started their second month below the 36 month moving average level. This has been a reliable indicator marking the start of a long term downtrend for stocks. This is not to say that stock prices (especially as measured in US Dollars) may not go higher from here; but it is very likely that a year or two from now, US stocks in general will be far below their current gold value. There will be exceptions, particularly among the gold mining stocks, but unless you are a short-term trader, I would strongly suggest exiting most US stock positions.