Weekly Update 30 Aug 2019 Dow Sell Signal

This week, national currencies, bonds, and cryptocurrencies fell, while stocks and commodities were mixed. The largest gains were in the precious metals, as platinum rose 7.9% to close at 19.0 grams and silver advanced 5.5% to 372 mg. The largest losses were in cryptocurrencies, as Ethereum dropped 14.7% and Bitcoin fell 9.3%. The Dow closed the month below its 36 month moving average, flashing a sell signal (see more below).

The US and Canadian dollars were the winners among the national currencies, falling 1.6%. The Chinese Yuan fared worst, dropping 3.0%, followed by the Euro which was down 2.5%. The British Pound and Swiss Franc (not in table) did about the same, dropping 2.4% each. Bonds were also lower, as the short term SHY fell 1.6% (in line with USD cash) while the long term TLT performed better, giving up 0.7%.

Cryptos were put through the ringer again this week. Ethereum was hardest hit, starting the week just above 4 grams, it worked its way down to a low of 3.42 grams on Thursday, then recovered to end the week at 3.49 grams, off 14.7%. Bitcoin followed a similar path, but ended down 9.3%. On a longer term note, Bitcoin (along with gold stocks and palladium) is one of the few assets that is still higher than it was one year ago.

The Dow Jones Industrials were the strongest equity index, rising 1.4%. Japan's Nikkei index fell the most, dropping 1.8%. Gold stocks were also off, closing down 0.7%; however over the last year, they have risen 24.5%, the largest gain of any asset in the table. For many years I have been tracking the Dow Industrials against their 36 month moving average, and have found that it makes an excellent long-term trading indicator. It went short in Sep-2001, around 1140 grams, and stayed short until Feb-2013 at about 260 grams. Aside from a brief whip-saw in 2016, the indicator has been in buy mode since then… but has now, at about 537 grams, switched back to sell mode.

Commodity gains were limited to the precious metals, as platinum rose 7.9%, silver gained 5.5% and palladium added 3.3%. Copper had the largest drop, falling 1.7%.

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Weekly Update 23 Aug 2019

It has been an interesting week with a surprise ending! Up until Friday's London PM fix, the official price I use for calculating the value of the US Dollar and other currencies, my summary would have been "National currencies, cryptocurrencies and bonds rose, while equities and commodities were mixed." But shortly after the PM fix, all hell broke loose in the trade war between the US and China, and currencies, especially the USD, tanked. This affects the prices of all the assets quoted in those currencies, pushing most of them lower by 1.0% to 1.5%. So the summary became "National currencies and bonds fell, while cryptocurrencies, equities and commodities were mixed." The biggest winners and losers remain the same, however. Gold stocks trounced all other assets, rising 6.7% (or 5.2% at end of day). The largest losses were in cotton, which dropped 2.5% (or about 4.0% by end of day).

The Japanese Yen was the best performing currency, rising 1.2% at PM fix, and closing the day off about 0.3%. The US Dollar, Euro, and Chinese Yuan finished in the basement, up 0.8% at PM fix but down 0.7% by end of day. My comments on other asset classes will be based on the PM fix prices shown in the table, but keep in mind that all finished the day 1.0% to 1.5% lower than shown here, so any asset that gained less that that amount actually ended the week at a loss. Bonds were weaker than USD cash, closing up 0.7% for short term SHY and 0.6% for long term TLT.

Ethereum made big gains this week, rising to a high of 4.2 grams on Monday, then pulling back to close the week at 4.0 grams, up 5.8%. Bitcoin followed a similar pattern, making a high of 226.9 grams on Monday, but fell harder as the week progressed, closing at 215.3 grams, up 1.1%.

Gold stocks were the week's star performer, both among the equities and overall. The HUI index gained 6.7% while the next strongest index, the Nikkei 225, added 2.6%. The S&P 500 was the weakest index, falling 0.7%. The DOW was off 0.2%.

Coffee was the strongest commodity, gaining 4.2%. Platinum also performed well, rising 2.9% to close at 17.6 grams per ounce. Cotton fell 2.5% to 12.0 mg per lb, a new all-time low, and largest loss for any asset this week. Silver was little changed, up 0.1%, at 353 mg per ounce.

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Weekly Update 16 Aug 2019

National currencies, cryptocurrencies and equities fell, led by Bitcoin which dropped 13.6%, giving back most of its gains for the last month. Bonds and commodities were mixed, with the largest gains in TLT, the long term bond fund, which rose 3.1%. Outside of the cryptos, the largest losses were in coffee, down 5.7%, and platinum, off 4.6% to a new all-time low of 17.1 grams.

The Euro fell more than any other national currency, dropping 2.0%. The Chinese Yuan took a break after last week's collapse, giving up just 0.6%. The USD fell 1.2%. Bonds were mixed, as the short term SHY declined 0.8% while the long term TLT rose 3.1%, the largest gain of any asset.

Bitcoin dropped early in the week, falling from 246.4 grams to a low of 206.6 grams on Wednesday, then recovered to close at 213.0 grams, down 13.6%, the largest loss of any asset. Ethereum held fairly steady until Wednesday; then the price plunged and continued to decline, ending the week at 3.81 grams, off 12.9%.

Stock indexes were all lower, but gold stocks outpaced the major markets, falling 3.8%. The Nikkei fell least, closing off 1.3%. The Dow Jones Industrials were down 2.7%.

Commodities were mostly lower, but there were gains in palladium (up 0.6%) and cotton (up 0.9%). The biggest losses were in coffee, which fell 5.7% and platinum, which closed down 4.6% at 17.10 grams, a new all-time low. Silver was little changed, off 0.2%.

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Weekly Update 9 Aug 2019 CNY Plunges

National currencies and bonds fell, while all other asset classes were mixed, but mostly lower. The largest gains and losses were both in the cryptocurrency group, as Bitcoin rose 8.6% and Ethereum fell 7.0%. The second-largest losses were in the Chinese Yuan, which plunged 6.4% — a huge one-week drop for a national currency. The next largest gains were in gold stocks, which added 1.3%. The only other rising asset was silver, up 1.0%.

National currencies were all lower, led by the Chinese Yuan, which fell 6.4%, setting off a cascade of effects as Chinese investors moved to safe havens like Bitcoin, silver and gold. Many currencies, including the British Pound Sterling, the Canadian and Australian Dollars, as well as the Argentinian and Chilean Pesos, hit new all-time lows this week. Even the Euro, down 2.9%, sits only 3% above its all-time low. The US Dollar, off 3.7%, is still relatively strong, about 25% above its all-time low. Bonds fared better than cash, as the short term SHY fell 3.6%, and the long term TLT (considered by many a "safe haven" asset) dropped 1.2%.

Bitcoin hit a high of 250.6 grams on Tuesday, then pulled back to close at 246.4 grams, up 8.6%. Ethereum followed a similar pattern, but rose less and fell back more than Bitcoin, resulting in a 7.0% loss for the week. This was also the pattern for many of the "alt-coins", as crypto investors switched to the oldest, largest, most stable and most liquid of the cryptocurrencies, Bitcoin.

Gold stocks shone this week, adding 1.3%, the only equity class to make gains. They are also the only equities to be up year over year. The Japanese Nikkei took the biggest hit, falling 4.8%, followed closely by the Dow Jones Industrials, which declined 4.5%.

Silver was the lone gainer among the commodities, rising 1.0%. The largest losses were in crude oil, which dropped 5.7%. Precious metals showed relative strength; in addition to silver's gain, palladium and platinum had the smallest losses in the commodity group, giving up 0.8% and 1.2% respectively. However, platinum did hit a new all-time low of 17.6 grams this week before recovering to close at 17.9 grams.

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Weekly Update 2 Aug 2019 Gold Bonds?

Stocks and commodities moved lower, while all other asset classes were mixed. Bitcoin made the largest gains, rising 5.0%. The biggest losses were in palladium and cotton, which dropped 10.6% and 9.3% respectively. We seem to be seeing a shift away from high-flying assets towards relative "safe havens" like gold, Bitcoin, and long term treasury bonds. New safe haven options are coming soon, including gold bonds (more on that below.)

National currencies were mostly lower, with the Japanese Yen, up 0.5%, being the lone exception. The largest drops were in the Canadian Dollar, down 1.9%, and the Chinese Yuan, off 1.8%. The Pound Sterling (not in chart) fell even more, giving up 3.6% to close at a new all-time low of 26.1 mg. USD cash under-performed bonds, falling 1.5% while short term bonds dropped 1.2% and 20+ year bonds rose 2.5%.

Bitcoin fell early in the week, hitting a low of 207.5 grams on Sunday, then began rising, and was given a big boost by Wednesday's Fed rate cut, closing the week at 226.9 grams, up 5.0%. Ethereum also dropped over the weekend, but struggled to make up the losses, finishing down 2.3%. DASH (not shown on the chart below) fell throughout most of the week, seeing only a small dead cat bounce after the Fed announcement. It finished down 9.9%. It now takes over 102 DASH to buy 1 BTC, the most since March of 2016.

Gold stocks outperformed other equities, falling just 0.6%. The European STOXX fell the most, dropping 5.5%, followed by the S&P 500, which gave up 4.5%.

Commodities were all lower, led by palladium, which plunged 10.6% to 30.0 grams, below parity with gold, and its lowest level since November of 2018. Cotton fell throughout the week, but really picked up speed on Friday, closing at 12.8 mg/lb, down 9.3%. Crude oil outperformed the other commodities, falling just 2.4%. Silver also held up better than most, dropping just 2.9%.

Looking back over the last 12 months, only Bitcoin, palladium, and gold stocks are higher, while long term treasuries are little changed. All other assets are lower, in some cases, much lower, including Ethereum, DASH, cotton, and crude oil – all with losses exceeding 30%. A number of assets, including coffee, and major currencies like GBP, CAD and AUD, are making new all-time lows.

My feeling is that increasing allocations to gold, Bitcoin, silver and platinum will pay off in the months (and years) to come. Gold, because it is cash, outside the financial system. Bitcoin, because it is the digital equivalent of gold, instantly transferable over the internet, and held outside the financial system, but with tremendous upside potential as more and more people begin to acquire and use it. Finally, silver and platinum, because they are very near their all-time lows and offer excellent appreciation potential, but also represent wealth that can be held privately, outside the financial system. In particular, silver, which has been a monetary metal for thousands of years, could one day resume that function, so holding some silver in coin form may prove especially useful.

While mining stocks can be leveraged to gold, and have been performing well lately, they bring with them large counter-party risks, as well as many business risks. (I'm sure you've heard the old quip about a mine being a hole in the ground surrounded by liars.) Other investment opportunities are coming soon that you should keep in mind, especially gold bonds. Like conventional bonds, these debt instruments are senior to equity, and therefore inherently safer than owning shares of stock. Unlike conventional bonds, they repay their principle and interest in gold, eliminating risky exposure to national currencies (with the Japanese Yen down 11.8%, the USD down 15.6%, the GBP down 21.6% over the last year, any nominal returns from conventional bonds would have been totally wiped out). I'm watching these very closely, and plan to get involved in the first issue. If this sounds interesting to you, head over to Monetary Metals. I don't receive any compensation, but let them know you heard about it at Priced in Gold!

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Weekly Update 26 Jul 2019

Currencies, bonds, and major stock indexes moved higher, while cryptos and commodities were mixed. Cotton and the S&P 500 made the largest gains, rising 3.7% and 3.0% respectively. The biggest losses were in Coffee, which fell 5.8%, and Bitcoin, which dropped 5.0%.

All national currencies rose, but the largest gains were in the Chinese Yuan, up 1.5%, and the US Dollar, up 1.4%. The Pound Sterling (not in chart) rose the least, gaining 0.4%. USD cash outperformed bonds, as short term bonds were up 1.3% and 20+ year bonds rose 1.2%.

Bitcoin fell early in the week, hitting a low of 213.9 grams on Wednesday, then recovered to close at 216.1 grams, down 5.0%. Ethereum followed a similar trajectory, hitting a low of 4.6 grams on Tuesday, but recovered to close the week little changed, up 0.6%. DASH (not shown on the chart below) took a beating in the prior week, but recovered a bit this week, rising 3.4%.

Gold stocks were this week's only equity loser, sliding 0.6%. The S&P 500 saw the largest gains, rising 3.0%. The Nikkei rose the least of the major market indexes, adding 1.4%.

Commodities were mixed, with a 5.8% loss in coffee and a 3.7% gain in cotton being the extreme price moves for the week. Crude oil added 2.4%, a reversal of the prior week's 9.7% drop. Copper and palladium were lower, off 2.1% and 0.4% respectively, while platinum and silver were higher by 1.1% and 0.6%.

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Weekly Update 19 Jul 2019 ETH crashes, Silver soars

Currencies, cryptocurrencies, bonds, and major stock indexes were all lower, while commodities were mixed and gold mining stocks rose. Silver and platinum made the largest gains, rising 7.0% and 3.7% respectively. The biggest losses were in Ethereum, which cratered 21.7%, and Bitcoin, which dropped 12.9%. Crude oil was also hit hard, falling 9.7%.

All national currencies fell, but the largest drops were in the Canadian Dollar and the Euro, which declined 2.5% each. The smallest losses were in the Japanese Yen, which closed down 2.0%. USD cash fell 2.2%, while short term bonds were off 2.1% and 20+ year bonds were down 1.1%.

Bitcoin fell early in the week, hitting a low of 209 grams on Tuesday, then recovered to close at 227.5 grams, down 12.5%. Ethereum followed a similar trajectory, hitting a low of 4.4 grams on Monday, but recovered only weakly, closing at 4.8 grams, down a whopping 21.7%. Once again, some other cryptos did even worse; for example, DASH (not shown on the chart below) finished down 23.3%. Theories abound on the drop's cause; congressional concern over Facebook's Libra coin and presidential tweets critical of cryptocurrencies are often mentioned. In my opinion, these FUD factors are creating a great buying opportunity.

Gold stocks were this week's only equity winner, gaining 2.8%. The S&P 500 and Euro STOXX fell the most, dropping 3.4% and 3.3% respectively. The Dow Industrials fell the least of the major market indexes, giving up 2.9%.

Commodities were very mixed, with extremes ranging from silver's 7.0% gain to crude oil's 9.7% plunge. The platinum group metals split, with palladium falling 2.0% while platinum rose 3.7%. Silver reversed course and rose steadily through this week after hitting some of the lowest prices in 20 years during the prior week.

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Weekly Update 12 Jul 2019

Bonds were lower, but all other asset categories were mixed. Bitcoin and crude oil had the largest gains, as BTC rallied 6.2% and crude added 3.3%. The biggest losses were in cotton, which fell 6.6%, and Ethereum, which dropped 5.4%.

The only rising national currency was China's Yuan, which gained 0.6%. The largest currency losses were in the US Dollar, down 1.3%, and the Euro, off 1.1%. Short term bonds tracked USD cash, falling 1.3%, but the long term TLT did much worse, dropping 3.0%.

Bitcoin rose early in the week, hitting a high of 281 grams on Tuesday, then pulled back to close at 261.1 grams, up 6.2%. ETH followed a similar trajectory, hitting a high of 7.0 grams on Monday, but got slammed on Wednesday and Thursday, ending the week at 6.1 grams, down 5.4%. Some other cryptos did even worse; for example, DASH (not shown on the chart below) didn't rise much early in the week, but took a large hit on Wednesday and Thursday, finishing the week off 7.2%.

Gold stocks were this week's equity winners, gaining 2.6%. The Dow Industrials also rose a bit, gaining 0.2%. The Euro STOXX fell the most, dropping 1.9%.

Commodities were mostly lower, but crude oil was the exception, rising 3.3%. Cotton was hardest hit, falling 6.6%, but coffee wasn't far behind, dropping 5.5%. Platinum fell 3.0% to close at 18.1 grams/oz, just 2.4% above its all-time low. Silver fell to a low of 333 mg/oz on Wednesday before rallying to close at 335 mg, down 1.8%, and the lowest level seen since February of 1991, when it briefly traded at 309 mg.

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Weekly Update 5 Jul 2019

Cryptocurrencies were lower, stocks and bonds were higher, and national currencies and commodities were mixed. Bitcoin had the largest loss, pulling back 10.2% this week, but was still up 34.9% from one month ago. The biggest gains were in cotton, which rose 6.4%, and palladium, which added 4.8%.

The only falling national currency was the Chinese Yuan, which dropped 0.1%. The US Dollar fared best, gaining 1.5%. Bonds were up, but did worse than the underlying USD cash, as the long term TLT gained 1.4% and the short term SHY added 1.3%.

The week's largest losses were in the cryptocurrencies, as they paused for breath after a multi-week sprint higher. Bitcoin saw a low of 236.8 grams on Monday, then rallied through the week to close at 245.9 grams, off 10.2%. Ethereum closed down 6.1%.

Stock markets were all higher, led by the S&P 500, which gained 3.1%. Trailing the major market indexes were the HUI gold stocks, which added just 0.9%.

Commodities were mostly higher, with the exceptions being copper, down 0.6%, and crude oil, off 0.2%. Cotton was the week's big winner, gaining 6.4%. The PGMs also did well, as palladium rose 4.8% and platinum added 3.2%. Silver was up 1.4%.

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Weekly Update 21 Jun 2019

Cryptocurrencies moved to new highs for the YTD, national currencies and bonds slid lower, and stocks and commodities were mixed. Bitcoin topped the winner's list, rising 12.9%. Crude oil and gold stocks also rose strongly, gaining 5.8% each. The largest losses were in cotton, which plummeted 10.3%.

All national currencies were lower, with the US Dollar falling the most, closing down 3.3%. The Canadian Dollar fell least, giving up 2.2%. US Treasury bonds were also down, as the short term SHY declined 3.1% and the long term TLT fell 3.3%.

Cryptocurrencies soared again the week, as Bitcoin surged 12.9% to a new high for 2019 of 225.8 grams, then continued to rise over the weekend. Ethereum rose 8.0%, the week's second largest gain. The announcement of Facebook's Libra coin was seen as a major factor for these gains, as it promises to bring crypto into mainstream usage, but does not compete with Bitcoin and Ethereum for privacy and operational capability, and has little appeal as an investment, being tied in value to basket of national currencies.

Gold stocks rose strongly, gaining 5.8%, but all major stock indexes were lower. The Dow Jones Industrial Average and the Euro STOXX fell 2.1% each. The S&P 500 was off 1.2%.

Crude oil gained 5.8%, and tied with gold stocks for third place overall. Cotton swooned 10.3%, closing at 13.6 mg/lb. Cotton is now down 33.4% from one year ago, a record exceeded only by Ethereum, which in spite of its recent gains, is still down 49.8% over the last 12 months. Platinum fell 3.6% to a new all-time low of 17.9 grams. Silver dropped 1.6% and palladium gained 0.3%.

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