All of the government currencies were strong this week, with the CAD up 1.5%, JPY up 1.4%, and even the battered EUR showing a 0.5% gain. Bitcoin (BTC) however, took a beating, dropping 11% early in the week, but recovering some ground to finish the week down 4.6%. Remember my comments from last week: the BTC is a highly volatile young currency. Expect to see it mentioned often as one of the biggest winners or losers!
Currencies were weak this week, with the EUR treading water up 0.1%, while the USD and CAD fell 0.4% and 0.6% respectively. The weakest of the bunch was the JPY, down 1.5%. This week I am starting to include coverage of Bitcoin (BTC). As you can see from the chart below, bitcoin has had a meteoric rise over during the last two years since its introduction, though this has been punctuated by sharp declines. This volatility is caused by the currency's youth: it is being adopted by thousands of new users each week, and this rising demand is pushing its value up. But any time there is a rumor of a theft or concern about a government crackdown, the value can tumble sharply. This week, BTC is the only currency to show much strength, and over the last month, and the last year, it outshines all other investment categories. Worth keeping an eye on! Learn more at bitcoin.org.
More on Market Update 5 Oct 2012 – Bitcoin, Coffee and Crude
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Anxiety over the massive coordinated money printing program continued this week, pushing the EUR and CHF to new all-time lows and the USD to the lowest level since February. For the week, though, the JPY dropped more than either the USD or EUR, losing 1.3% to close at 0.223 mg.
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Another great email just came in, asking for a chart of the US Federal Debt. I'm not sure what the US Debt numbers really mean… the data are so manipulated and massaged, and they leave out so much (state and local government debt, unfunded liabilities, and on and on)… but here is a stab at it.
This chart uses US Federal Debt data from US Federal Debt United States 1900-2016 – Federal State Local Data. The gold prices used for conversion are annual averages for 1900 to 2011, and for 2012 to 2016 they are estimates based on my Half-Life of the USD curve.
Over the last decade, the government has inflated away more than half of the peak federal debt. It is now back to late 1960s levels; if we continue to halve the debt every decade, it could be back to 1930s levels by the 2030s. Of course, by that time, gold will be over $45,000/oz, gas will be $120/gal, a first class stamp will cost $13 (if the USPS is still in business – not likely!), and a McDonald's Happy Meal will probably set you back $90.
I find it sort of refreshing to see that the debt is being reduced in real terms in spite of its phenomenal growth in nominal terms; but the economic implications of this "inflationary depression" are downright scary. The mis-allocations of capital caused by these policies will be horrendous, resulting in dramatically lower standards of living for the average family. I wonder if they can really keep it up for two more decades before people catch on to what's happening? We'll see!
Cheers,
Sir Charles
Editor@pricedingold.com
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Today, Apple Computer (AAPL) became the company with the highest market capitalization ever, as measured in US Dollars. It exceeded the market cap record set back at the end of 1999 by Microsoft, according to the MarketWatch article "Apple closes as most valuable company of all time".
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As usual, the biggest gains and losses were in the commodities this week, with crude oil rising 3.6% while coffee fell 3.4%. Silver and copper also gained, while cotton was off slightly. The currencies were little changed, with the Canadian Dollar up 0.7%, the USD up 0.2%, the Euro unchanged, and the JPY down 0.6%.
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Last week saw yet another reversal from the week before; once again, the only thing in common was the continuing decline in silver and copper, now in its 3rd week.
Currencies gained back some of what they lost the week before, lead by the CAD, which rose 1.8%. Bonds were higher, the SHY up 1% (in line with the USD) and the long term TLT up 0.4%, only recovering a tiny portion of the prior week's 3.8% loss.
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Last week was almost a complete reversal from the week before; the only thing in common was the continuing decline in silver and copper.
Currencies were all down strongly, with the EUR leading the decline, falling 3.2%. Bonds also fell; the long term TLT falling the most, down 3.8% while the shorter term SHY moved down 2.6%, roughly in line with the decline of the USD.
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Most of the strength last week was in commodities, with coffee up 4.3% and crude oil up 2.6%. The only other strong gains were in TLT, the long term US treasury ETF, up 1.2%. Stocks and currencies were all down or unchanged for the week. The biggest losers were gold stocks, represented by the HUI, down 5% and the Euro, down 2.6%.
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