Weekly Update 21-Oct-2016

This was a losing week for currencies and commodities, but mixed for stocks and bonds. Gold stocks made the largest gains, rising 7.0%, while palladium once again saw the largest declines, falling another 4.7%. Platinum also fell, dropping 1.8% to close at a new all-time low of 22.77 grams/oz.

Among the currencies, Bitcoin had the largest loss, giving up 2.4%, or bit more than half of the prior week's gains. The Euro was close behind, falling 2.3%. The least weak currency was the Chinese Yuan, which fell 0.9%. Bonds showed a longer time preference this week, with the long term TLT gaining 0.2%, while SHY lost 1.0% and USD cash lost 1.1%.

Major stock markets once again split along geographical lines, with the US stocks falling while Asia rose. The Dow Jones Industrials dropped 1.1%, and the Nikkei 225 gained 0.9%. The Euro STOXX index was unchanged.

Every commodity in the list fell this week, led by palladium, off 4.7%, and cotton, down 3.2%. The least weak commodities were crude oil, down 0.1%, and coffee, which closed 0.7% lower.

Copper and Platinum continued their declines, falling 2.1% and 1.8% respectively. As mentioned above, platinum closed the week at a new all-time low of 22.8 grams, but it recovered smartly on Monday and Tuesday and is currently trading at 23.5 grams (about where it was 2 weeks ago). I continue to see this as an excellent buying opportunity for the white metal, which is much rarer than gold, has numerous industrial and jewelry uses, and historically trades at a significant premium to gold – as opposed to its current 24% discount.