Weekly Update 9-Dec-2016

This was a good week for stocks, but mixed for bonds and commodities. The big winner was the Euro STOXX, which gained 6.3% this week on news that the European Central Bank will be extending its low interest rate policy and expanding its quantitative easing programs. US stocks also rallied on the news. Coffee dropped again this week, falling a further 3.6%, the largest loss of any asset class. Gold stocks took the next biggest hit, giving up 2.7%, or about half of their gain from the prior week.

The Canadian Dollar was once again the strongest government-issued currency in the list, gaining 1.7%, followed by the US Dollar, which gained 0.9%. Bitcoin took it easy this week, adding 0.7% to last week's 5.6% gain. The weakest currency was the Chinese Yuan, which lost 0.2%. Bonds were mixed, as buyers again showed their distaste for longer maturities, as the 20+ year TLT fell 0.9%, while the 1-3 year SHY gained 0.8%, and USD cash outperformed both by rising 0.9%.

All major stock indexes were higher, led by the Euro STOXX, up 6.3%. The S&P 500 and Dow Jones Industrials gained 4.0% and 3.9% respectively. Gold stocks were the only falling equities, off 2.7%.

As mentioned earlier, coffee was the weakest asset class this week, dropping 3.6%. Silver made the largest gains in the commodity group, adding 4.6%. Copper resumed its rise, gaining 1.9%, and platinum and palladium were 1.6% and 1.0% higher, respectively. Crude oil took a breather, gaining just 0.5% after the prior week's massive 13.6% jump.

A look back at the last year

We are nearing the end of 2016, and I thought it would a good time to reflect back on the last year's results. Government-issued currencies have all struggled, while the free market digital currency, Bitcoin, has soared, rising 71.2% – more than any other asset class. The Chinese Yuan fell 15.9%, making it not only the worst performer among the major currencies, but also the worst performer of any asset class. Among the major currencies, the Japanese Yen fared best, dropping just 0.8% year over year.

Bonds were down hard, reflecting higher rates and again showing a distinct preference for shorter maturities. The long term TLT fell 8.6%, the short term SHY was off 6.7% and USD cash was down 7.1%.

Equities were mixed. The HUI gold stocks rose 41.9% to take second place among all asset classes after Bitcoin. Europe and Japan fell 12.5% and 2.4% respectively, while the major US markets rallied. The Dow Jones Industrials were up 4.9%, and the S&P 500 gained 2.5%.

Commodities were all higher, led by crude oil, which rose 28.8%. Palladium also made huge gains, rising 24.8%. Platinum, in contrast, was the weakest of the group, gaining just 0.5%. Copper and silver did much better, rising 19.1% and 10.3% respectively.

Priced in Gold Weekly Summary

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