November 21, 2016

Weekly Update 18-Nov-2016

Things stabilized a bit this week, with mixed results for most asset classes as investors sorted through the debris of the coming political sea-change in the US. The largest swings were in commodities, with silver the week's biggest loser, down 9.3%, and cotton and crude oil the week's biggest winners, up 7.9% and 7.5% respectively.

Bitcoin was once again the strongest currency, gaining 6.8%, followed by the Chinese Yuan, which gained 2.9%. The weakest currency was the Japanese Yen, which fell 1.5%. Bonds were higher, but again showed a preference for shorter maturities, with the long term TLT gaining 1.1%, while short term SHY gained 1.9% and USD cash rose 2.1%.

Most major stock indexes were higher, with the exception of the Euro STOXX, which fell 0.7%. Gold stocks rebounded this week, rising 3.2%. The S&P 500 added 2.9%, and the Japanese Nikkei gained 1.9% in spite of (or because of?) the falling Yen.

As mentioned earlier, commodities were mixed, led by cotton and crude oil, which rose 7.9% and 7.5% respectively. Silver gave up all of last week's gains and then some, falling 9.3% to close the week at 0.42 grams per ounce. Copper rested after last week's huge rise, closing this week up 0.4%. Palladium continued to soar, gaining another 6.4%, while platinum languished, falling 3.2% to close at 23.7 grams/oz.

I wish all my US readers a very happy Thanksgiving. Looking back on the last year, Bitcoin, up 97.3%, and gold stocks, up 48.6%, have been the standout performers. With the exception of platinum and crude oil, commodities in general have done very well, too. I look forward with excitement to the year ahead, but recommend keeping a substantial part of your assets in counter-party risk free investments like Bitcoin, precious metals, and cash. These may fluctuate in market value, but can't be rendered worthless or inaccessible through the bankruptcy or closure of intermediaries, nor can they be easily confiscated or "bailed-in" by government edict. Gold and silver in a brokerage account or bank deposit box can be easily grabbed by government orders, but when in your personal possession or stored overseas in a non-bank vault, the situation changes drastically in your favor.

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Tags: Counter-party Risk, Weekly Update

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November 14, 2016

Weekly Update 11-Nov-2016 US Election!

The US Presidential elections threw markets a major league curveball this week. As results started to trickle in, and the tide turned in favor of Mr. Trump, the US Dollar and stock market futures fell dramatically… but by the next day, they both reversed course and continued to climb through the rest of the week. This left all asset classes other than gold stocks and long term treasury bonds in the black.

Currencies, commodities, and major stock indexes were all higher this week, while bonds were mixed. Bucking the overall uptrend, gold stocks were the biggest loser this week, falling 12.7%, while copper and palladium made the biggest gains, rising 16.85 and 15.5% respectively.

Bitcoin was the strongest currency, gaining 7.5%, followed by the US Dollar, which gained 5.4%. The weakest currencies were the Chinese Yuan and Japanese Yen, which rose 1.8% and 1.9% respectively. Bonds showed a preference for shorter maturities this week, with the long term TLT falling 2.4%, while short term SHY gained 5.0% and USD cash rose 5.4%.

The major stock indexes were all up, led by the Dow Jones Industrials, which gained 11.0%. Japan rose the least; the Nikkei 225 was up 4.7%. Gold stocks were the exception, as the HUI collapsed 12.7%, falling to it's lowest level since March.

As mentioned earlier, commodities were all higher, led by copper and palladium, which rose 16.8% and 15.5% respectively. Silver managed a respectable 7.0% gain, and crude oil snapped its losing streak to close 3.8% higher. Platinum added 2.3% to close at 24.5 grams/oz, still far below the gold parity price of 31.1 grams.

My take is that investors are expecting Trump's promised reductions in tax rates and big spending on infrastructure and military expansion to be good for stocks and boost demand for strategic commodities like copper, palladium and silver. But they are nervous about the growth of deficits and long term debt that these programs imply. If we also get the promised import tariffs and reduced participation in global trade agreements, we could see a reversal in the stock market (which is already grossly overpriced) and a move away from government-issued currencies toward Bitcoin and precious metals, which are much more difficult to confiscate or "bail-in" if things head south.

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November 10, 2016

Weekly Summary 4-Nov-2016

Currencies, bonds, and major stock indexes were all lower this week, while commodities were once again mixed. Bucking the equity downtrend, gold stocks were the biggest winner this week, rising 2.6%, while crude oil positively collapsed, falling 11.6%, and "doubling down" on the prior week's 4.8% loss. This still leaves crude just above its long term support around 1 gram/barrel, and closer to its highs than to its lows for 2016 YTD.

The weakest currencies were the Canadian and US Dollars, which dropped 2.4% and 2.3% respectively. The least weak currency was Bitcoin, off 0.2%, followed by the Japanese Yen, which fell 0.3%. Bonds showed a longer time preference this week, with the long term TLT falling 1.1%, while SHY lost 2.1% and USD cash lost 2.3%.

The major stock indexes were all lower, led by the S&P 500, which fell 4.2%. Japan had the least weakness; the Nikkei 225 was off 3.4%. Gold stocks were the exception, as the HUI rose 2.6%.

Silver led the commodity group, rising 1.5% to close at 0.44 grams/ounce. Platinum and copper also rose, gaining 0.8% and 1.0% respectively. This leaves platinum just a hair below 24 grams/oz, still far below the gold parity price of 31.1 grams.

The big action this week was in crude oil, which dropped 11.6% to close at 1.05 grams, almost exactly its average price for the year to date.

Stay tuned next week to see how the US presidential election changes things up in the markets.

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October 30, 2016

Weekly Summary 28-Oct-2016

This was a losing week for government-issued currencies as well as stocks and bonds, but mixed for commodities. The free market currency Bitcoin made the largest gains, rising 8.6%, while crude oil and gold stocks saw the largest declines, falling 4.8% and 4.7% respectively. Platinum bounced back, recouping almost all of the prior week's losses.

As mentioned above, while Bitcoin was surging, all of the government-issued currencies were falling, led by the Japanese Yen, which dropped 1.7%, and the Canadian Dollar, which fell 1.4%. The least weak currency was the Euro, which fell 0.3%. Bonds switched gears and showed a shorter time preference this week, with the long term TLT falling 2.7%, while SHY lost 0.6% and USD cash lost 0.5%.

Stocks were all lower, led by the HUI gold stocks, which fell 4.7%. The S&P 500 Index dropped 1.2%, while Europe and Japan had the least weakness; the Nikkei 225 was off 0.2%, and the Euro STOXX index was 0.3% lower.

Coffee and copper were very strong this week, rising 5.4% and 4.5% respectively. The weakest commodities were crude oil, which fell 4.8%, and palladium, which slowed it's rate of descent, dropping 1.0%. Silver ended the week unchanged.

As mentioned above, platinum bounced back after setting a new all-time low of 22.8 grams in the prior week, ending this week at 23.75 grams/oz. I continue to see this as an excellent buying opportunity for platinum, which is trading at a 24% discount to gold, as opposed to its historical average 43% premium.

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October 25, 2016

Weekly Update 21-Oct-2016

This was a losing week for currencies and commodities, but mixed for stocks and bonds. Gold stocks made the largest gains, rising 7.0%, while palladium once again saw the largest declines, falling another 4.7%. Platinum also fell, dropping 1.8% to close at a new all-time low of 22.77 grams/oz.

Among the currencies, Bitcoin had the largest loss, giving up 2.4%, or bit more than half of the prior week's gains. The Euro was close behind, falling 2.3%. The least weak currency was the Chinese Yuan, which fell 0.9%. Bonds showed a longer time preference this week, with the long term TLT gaining 0.2%, while SHY lost 1.0% and USD cash lost 1.1%.

Major stock markets once again split along geographical lines, with the US stocks falling while Asia rose. The Dow Jones Industrials dropped 1.1%, and the Nikkei 225 gained 0.9%. The Euro STOXX index was unchanged.

Every commodity in the list fell this week, led by palladium, off 4.7%, and cotton, down 3.2%. The least weak commodities were crude oil, down 0.1%, and coffee, which closed 0.7% lower.

Copper and Platinum continued their declines, falling 2.1% and 1.8% respectively. As mentioned above, platinum closed the week at a new all-time low of 22.8 grams, but it recovered smartly on Monday and Tuesday and is currently trading at 23.5 grams (about where it was 2 weeks ago). I continue to see this as an excellent buying opportunity for the white metal, which is much rarer than gold, has numerous industrial and jewelry uses, and historically trades at a significant premium to gold – as opposed to its current 24% discount.

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October 18, 2016

Weekly Update 14-Oct-2016

This was a mixed week in all asset categories, but much less violent than last week, with the largest gains and losses in the commodities. Cotton and coffee made the biggest gains, rising 5.9% and 5.6% respectively, while palladium and platinum saw the largest declines, falling 4.2% and 3.8%.

Among the currencies, Bitcoin once again made the largest gains, rising 4.1%. The Chinese Renminbi was the weakest currency, giving back 1.1% of the prior week's 5.5% gain. The strongest government-issued currency was the Canadian Dollar, which gained 1.1%. Short term treasuries rose 0.5% while long term treasury bonds lost 1.2%; once again, both were out-performed by USD cash, which closed 0.6% higher.

Major stock markets were little changed this week, with the weakest being the the Euro STOXX (off 0.8%) and the strongest being the HUI gold stocks, which gained 0.7%. The S&P 500 dropped 0.4%, while the Dow Jones Industrials were unchanged.

After last week's big drop, silver recovered 1.4% this week. As previously mentioned, platinum and palladium weren't so lucky; platinum closed the week at 23.1 grams/oz, just 1.5% above it's all-time low. Copper gave back most of last week's gains, falling 2.5%, while crude oil continued it's rally, adding another 1.6%.

From 2011 to 2015, stocks were in a mighty uptrend, with the DJIA rising from 184 grams to a high of 523 grams. In 2016, however, they have broken down through that uptrend line, and have closed below their 36 month moving average in each of the last two months. This is a strong sign that stocks are now entering a prolonged downtrend, and any extended rallies will be selling opportunities. I would recommend taking profits and positioning for the bear market that we are now entering. Cash (in the form of physical gold) should be a large part of any portfolio. For potential gains without counter-party risks, physical platinum looks very attractive at these prices. Silver will eventually be a bargain as well, but it is still 40% above it's lows, and too risky for me at this point.

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October 9, 2016

Weekly Update 7-Oct-2016

This was a very strong week for everything except precious metals and gold stocks. Crude oil made the biggest gains, rising 8.5%, while gold stocks saw the largest decline, falling 9.4%.

Among the currencies, Bitcoin once again rose the most, adding 6.5%. The Chinese Renminbi rose 5.5%, and even the weakest currency, the Japanese Yen, gained 2.6%. Short term treasuries rose 4.9% while long term treasury bonds gained 2.5%; neither one could match plain, old USD cash stuffed into your mattress, however: that rose 5.1%.

Major stock markets were all higher this week, led by the Nikkei, which gained 5.2%; the Dow Jones Industrials and the Euro STOXX each added 4.7%. Only gold stocks were lower, and were they ever! The HUI dropped 9.4% to close below its 200 day moving average for the first time in 8 months.

Commodities were divided into two camps: precious metals, and everything else. All of the precious metals declined, led by silver, which fell 5.9%. Crude oil continued its outstanding performance, rising 8.5% on top of last week's 9.8% gain. Copper rose 3.4%, while cotton and coffee gained 3.4% and 2.6% respectively.

I would suggest that you take advantage of these updrafts to take profits and move some of your assets to the safety of gold. I don't know how long they will last, but once the US election is complete the fed will take the safety off of its monetary machine gun, and with Italian and German "too big to fail" banks on the very brink of failing, I think this is the time to be moving calmly but forcefully towards the exits – before everyone else smells the smoke and panics.

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October 3, 2016

Weekly Update 30-Sep-2016

Currencies and bonds rose this week, while stocks and commodities were mixed. The strongest asset class was crude oil, which gained 9.8%, while the weakest was silver, which lost 1.2%.

Among the currencies, Bitcoin made the largest gains, rising 2.4%. The USD and EUR rose 1.2% each, and even the weakest currencies, the CNY and CAD, gained 0.8%. Short term treasuries tracked the dollar's 1.2% gain while long term treasury bonds gained 1.7%.

Stock markets reversed course this week, with US markets rising and Euro and Japanese markets falling; the Dow Jones Industrials and the S&P 500 added 1.5% and 1.4% respectively. The Japanese Nikkei lost 0.8%, while the Euro STOXX fell 0.6%.

Both the strongest and weakest asset classes were commodities. Crude oil dominated, rising 9.8%, followed by palladium, which gained 5.8%. Silver fell 1.2% and platinum lost 0.8%.

Many commodities have recently made new all-time lows, including wheat, copper, and uranium. The latest IMO Food Price Index also set a new all-time low. Financial markets may be inflating (especially when priced in government-issued currencies), but real goods are priced at or below depression-era levels. And even stocks, like the Dow Jones Industrials, have now closed for 2 months below their 36 month moving average, which in the past has been a reliable indicator of a long-term bear market. This is the time to get defensive, holding cash in the form of physical gold and lightening up on speculative currency and equity positions.

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September 25, 2016

Weekly Update 23-Sep-2016

Currencies, bonds, and US stocks fell this week, while precious metals, gold stocks, and European stocks rose. The strongest asset class was palladium, which gained 3.4%, while the weakest was Bitcoin, which lost 3.0%.

The USD was the weakest government-issued currency, off 2.3%. The Japanese Yen was the "least weak" currency, falling 1.2%. Short term treasuries tracked the dollar's 2.3% decline while long term treasury bonds fell 0.8%.

Stock markets were lower in the US; the Dow Jones Industrials and the S&P 500 were off 1.5% and 1.1% respectively. The Japanese Nikkei rose 0.2%, while the Euro STOXX gained 1.2%.

Commodities were mostly higher, led by the precious metals. Palladium made the largest gains, rising 3.4%. Silver gained 2.4%, while platinum added 1.9% to close at 24.5 grams per ounce. Crude oil also had a good week, rising 1.0%. The only falling commodities were copper, down 0.4%, and coffee, off 0.3%.

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September 11, 2016

Weekly Update 9-Sep-2016

This week was mostly lower for bonds and equities, but mostly higher for currencies and commodities. The strongest asset class was Bitcoin, which rose 7.8%, while the weakest asset class was gold stocks, which fell 4.4%.

The Chinese Yuan was the weakest currency, off 1.8%. The Japanese Yen was the strongest government-issued currency, gaining 0.6%. The USD lost 0.5%, and long term treasury bonds fell 2.7%.

Stock markets were mostly lower, led by the HUI gold stock index, which dropped 4.4%. The Dow Jones Industrials and the S&P 500 were off 2.7% and 2.8% respectively. The Japanese Nikkei was the only rising stock index, gaining 0.9%.

Commodities were all higher except for coffee, which fell 0.6%. Silver made the largest gains, rising 3.0%. Crude oil gained 2.8%, while platinum rose 1.5% to close at 25.1 grams per ounce.