The big gains for the week of 1-July week were in precious metals and mining stocks, while most of the losses were in currencies and short term bonds. (My apologies for the late posting of this update. I will be posting the 8-Jul Update on Monday, 11-July.)
A generally negative week, with the major exceptions of Bitcoin, which once again led the way higher, and gold mining stocks, which rose nearly twice as far this week as they fell last week. Bitcoin gained 18.1%, while the HUI gold stocks rose 11.7%. The only other asset classes in the black were coffee (up 2.7%), TLT (up 0.8%) and the Chinese Yuan (up 0.3%). The biggest losses were in crude oil, off 3.4%, and silver, which declined 3.2%
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Currencies, bonds and most stocks were higher this week, while commodities were mixed. Coffee (up 6.4%) was the strongest asset class, continuing it's climb from last week. Crude oil was the next strongest, rising 5.4%, and more than recovering from the prior week's decline. The biggest losses were in copper, off 1.6%, and platinum, which fell 1.0%.
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Most asset classes were lower this week. The only exceptions were coffee, up 2.2%, Bitcoin, which rose 0.9%, TLT long bonds, up 0.8%, and platinum, which gained 0.4%. Cotton (down 7.2%) and copper (off 5.9%) were the weakest asset classes.
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Last week gold stocks crashed to their lowest levels ever. The HUI “gold bugs” index closed the week down 7.1% at 3.53 grams, a new all-time low, and on Monday 20-July fell another 9.8% to close at 3.18 grams. The Barron’s Gold Mining Index has made several new lows in 2015, but it also closed the week at a new all-time low of 11.59 grams, 21% below its long-standing 14.74 gram low set back in April of 1942.
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From the beautiful Bahamas, I wish you the very best for 2015. The year just ended has seen tremendous gains in a few areas including large cap US stocks, coffee, and long term treasury bonds – while currencies, gold stocks, and most commodities saw big declines.
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The International Monetary Fund created the SDR in the late 1960s to supplement the gold and other currencies held by countries as their reserves. The value of 1 SDR was initially defined as the same amount of gold as 1 USD. At the time, the USD was convertible into gold, so most countries chose to hold the bulk of their reserves in dollars instead of gold.
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Reader Daniel P wrote in a recent comment on the Half-Life of the US Dollar page:
Dear Sir Charles, thank you for an exciting and informative site it is much appreciated.
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I just received a call on the Priced in Gold Hotline asking for clarification about ounces and grams of gold and other precious metals.
First off, precious metals prices are most commonly quoted in US Dollars per troy ounce. We all haves a pretty good idea of what a dollar is, but a troy ounce is something we don't often see in any other context. It isn't the same as the ounce used in US household measures or scales… those ounces (known formally as avoirdupois ounces) weigh 28.3495 grams, and come 16 to the pound. Troy ounces weigh about 31.1035 grams, and come 12 to the troy pound. (Note that the word "ounce" comes from the latin for one-twelfth.)
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All asset classes but oil, silver, and mining stocks were higher this week.
Bitcoin ended the week up 57.6% at 2,724 mg, after setting another record high almost every day for the last 2 weeks. Interest in the online currency has continued to skyrocket as news spread that the "bail-in" plan that seized up to 80% of large bank deposits in Cyprus has been approved for future use in the US and Canada as well as in the rest of Europe. After this tremendous run-up, a pullback is to be expected. Note that BTC could fall over 80% to 500 mg or so and still be in an exponential uptrend! Expect further volatility.
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