Weekly Update 3 Feb 2017
This week saw government-issued currencies, bonds, and major stock indexes all lower. Commodities were mixed, with precious metals higher, while food and energy were lower. The week's biggest winner was once again Bitcoin, which gained 8.1%. Gold stocks also rose, with the HUI gaining 2.0%. The largest losses were in coffee and copper, down 6.4% and 5.0% respectively.
All national currencies fell, led by the US Dollar, which dropped 2.5%. The Japanese Yen fell least, losing 0.7%. Bonds were also lower; the short term SHY was down 2.6%, and the long term TLT was 3.0% lower. Both were outperformed by USD cash.
Major stock indexes were all down, giving up most or all of the prior week's gains. The decline was led by the Nikkei 225, which fell 3.5%. In the US, the Dow fell 2.6% and the S&P 500 lost 2.4%. Gold stocks bucked the trend and continued their rise, with the HUI gaining 2.0% to close at 5.43 grams.
Commodities were mixed, with only precious metals making gains. Silver and palladium rose 0.9% each, while platinum gained 0.2% to close at 25.4 grams. The largest losses were in coffee, down 6.4%, and copper, which dropped 5.0%. Crude oil finished the week down 1.3%.
Bitcoin, while volatile as ever, has been having a good year so far. In the first few days of the year it closed at new all-time high of 30.2 grams, just 3% below parity with an ounce of gold. A week later, it had fallen to 20.5 grams on concern over a Chinese central bank investigation. Since then, Bitcoin has been gradually working its way higher, and ended this week at 26.1 grams, about 16% below gold parity.
With governments all over the world declaring a war on cash so that they can "fight deflation" (that is, accelerate inflation) by the use of negative interest rates and other voodoo economics, Bitcoin continues to attract more and more users – and this is pushing its price higher. While holding physical gold is an excellent way to preserve purchasing power and keep savings outside the world's corrupted and failing fiat money banking systems, physical metal is expensive to store and transport, and is subject to seizure, especially at borders.
Although it is more volatile than gold, Bitcoin offers an excellent alternative that addresses many of gold's concerns, and may be the better choice for those interested in the mobility of their assets: Bitcoins can be sent anywhere in the world, for almost no cost, with a few mouse clicks, or carried across borders in a "brain wallet" that cannot be seized or stolen. And while volatility is a negative for some, it can also be a positive for traders looking to grow their gold.
2017 may be the year we finally see one BTC buying more than one ounce of gold on a persistent basis.