Weekly Update 30-Sep-2016
Currencies and bonds rose this week, while stocks and commodities were mixed. The strongest asset class was crude oil, which gained 9.8%, while the weakest was silver, which lost 1.2%.
Among the currencies, Bitcoin made the largest gains, rising 2.4%. The USD and EUR rose 1.2% each, and even the weakest currencies, the CNY and CAD, gained 0.8%. Short term treasuries tracked the dollar's 1.2% gain while long term treasury bonds gained 1.7%.
Stock markets reversed course this week, with US markets rising and Euro and Japanese markets falling; the Dow Jones Industrials and the S&P 500 added 1.5% and 1.4% respectively. The Japanese Nikkei lost 0.8%, while the Euro STOXX fell 0.6%.
Both the strongest and weakest asset classes were commodities. Crude oil dominated, rising 9.8%, followed by palladium, which gained 5.8%. Silver fell 1.2% and platinum lost 0.8%.
Many commodities have recently made new all-time lows, including wheat, copper, and uranium. The latest IMO Food Price Index also set a new all-time low. Financial markets may be inflating (especially when priced in government-issued currencies), but real goods are priced at or below depression-era levels. And even stocks, like the Dow Jones Industrials, have now closed for 2 months below their 36 month moving average, which in the past has been a reliable indicator of a long-term bear market. This is the time to get defensive, holding cash in the form of physical gold and lightening up on speculative currency and equity positions.