Weekly Update 16 June 2017
National currencies and bonds were higher, commodities were lower, and stocks and digital tokens (cryptocurrencies) were mixed. The biggest gains and losses were both in digital tokens, as Bitcoin fell 9.8% to finish the week at 62.6 grams (about 2 troy ounces) while Ethereum rose 33.4% to close at 9.2 grams. In equities, the US markets rose, while Europe and Asia fell. Gold stocks also resumed their downward trend, falling 4.3%, the second largest drop after Bitcoin.
This week's table is a little different from past weeks. I have broken out Bitcoin (and added Ethereum) to create a new "Digital Tokens" section. Although there is a strong case to be made for these tokens as free market currencies, they are much more than just a new form of money. Unlike stocks, bonds, and currencies, they have no centralized issuing authority, and require no intermediaries (such as banks, brokerages and clearing houses). Like physical commodities, tokens eliminate counter-party risk; but being digital, they have no mass, require no physical vaulting, and so are instantly accessed from anywhere the internet reaches: around the world, and even into space. While digital tokens can represent simple monetary value, they can also represent rights to storage space, computation power, share ownership, title to property, proof of identity, contracts between parties, and much more. As this asset class matures I look forward to adding additional tokens to this list.
The Canadian Dollar was this week's strongest national currency, rising 2.8%. The Japanese Yen rose the least, gaining 0.2%. Bonds favored the longer maturities, with the 20+ year TLT gaining 2.5% while the 1-3 year SHY and USD cash each added 0.9%.
Bitcoin started the week by rising to set a new all-time high of 74.1 grams on Sunday 11-June, but had pulled back sharply to 60.8 grams by Wednesday 14-June. Since then, Bitcoin has been working its way higher, closing the week at 62.6 grams, and continuing to climb though the weekend, trading on Monday at 65.8 grams. Ethereum, the token with the second largest market capitalization, hit an all-time high of 9.9 grams on 12-June, but closed the week at 9.2 grams, for a gain of 33.4%.
Gold stocks fell this week, giving up all of last week's gains, dropping 4.3% to close at 4.6 grams. Among the major markets indexes, US stocks were higher, with the Dow Jones Industrials gaining 1.4%, while the Euro STOXX lost 1.4% and the Nikkei 225 fell 0.1%.
Commodities were all lower this week, led by cotton, which fell 4.2%. Silver was the next weakest commodity, falling 2.5%. Platinum was the least weak, dropping 0.8% to close at 22.9 grams, less than 1% above its all-time low.