August 14, 2016

Weekly Update 12-Aug-2016

Another mixed week, with currencies mostly lower, and stocks lower in the US, but higher in Japan and Europe. Commodities were volatile: crude oil made the biggest gains this week, rising 5.5%, while the largest losses were in cotton, off 8.7%, and coffee, down 4.8%.

The only rising currencies were the Chinese Yuan, which gained 1.6%, and Bitcoin, which rose 1.0%. The biggest currency losses were in the JPY, which fell 1.2%. Bonds were mixed, with the the short term SHY losing 0.8% (roughly tracking USD cash) while the long term TLT gained 0.6%.

Equities were split between the US, where the DJIA dropped 0.7% and the S&P 500 fell 0.8%, and the Euro STOXX, which gained 2.2%, and the Japanese Nikkei 225, which rose 2.8%. Gold stocks rose 0.6% to close at 6.41 grams, right on their long term resistance line. The HUI is now up 86% from one year ago, putting gold stocks and Bitcoin neck and neck as the best performing asset classes over that period.

Commodities were also mixed. Crude oil, which dropped 7.4% at the end of July and was little changed in the first week of August, finally showed a significant gain, rising 5.5% this week. The week's largest losses were in cotton, off 8.7%, and coffee, down 4.8%. Metals were all lower, led by silver, which dropped 2.6%.

Although not one of the assets I track weekly, it is worth noting that uranium ended July by setting a new all-time low of 0.59 g/lb. (My data goes back to 1988.) Is this the time to buy? Or is it the time to sell? And in either case, what's the best way to do so? I'm working on a report now that will give my answers to these questions.

Click for PDF version

Filed under Bitcoin, Bonds, Coffee, Commodities, Cotton, Dow Jones Industrials, S&P 500, Silver, Stocks, Uranium by editor

Facebook Google+ Twitter Pinterest

Email Print

August 3, 2016

Weekly Update 29-July-2016

This was a mixed week, with currencies mostly lower, and stocks lower in the US, but higher in Japan and Europe. Crude oil had the biggest drop, falling 7.4%, while the largest gains were in the Euro STOXX, up 5.9% and the gold stocks, which rose 4.2%.

The only rising currency was the Japanese Yen, which gained 0.9%. The biggest currency losses were in the USD and CAD, which fell 1.6% each. Bonds were mixed, with the the short term SHY losing 1.5% (roughly tracking USD cash) while the long term TLT gained 0.4%.

Equities were split between the US, where the DJIA dropped 2.3% and the S&P 500 fell 1.6%, and the Euro STOXX, which gained 5.9%, and the Japanese Nikkei 225, which rose 0.5%. The UK FTSE was off just 0.2% after a huge 7.8% rally the previous week. Gold stocks rose 4.2% to close at 6.36 grams, right at their long term resistance line. The HUI is now up 97% from one year ago, making gold stocks the best performing asset class over that period.

Commodities were also mixed. The big news here was in crude oil, which dropped 7.4%. Platinum and palladium were the strongest commodities, gaining 1.7% each. Silver was almost unchanged, up 0.1%, while copper lost 1.8%.

The Dow Jones Industrials have started their second month below the 36 month moving average level. This has been a reliable indicator marking the start of a long term downtrend for stocks. This is not to say that stock prices (especially as measured in US Dollars) may not go higher from here; but it is very likely that a year or two from now, US stocks in general will be far below their current gold value. There will be exceptions, particularly among the gold mining stocks, but unless you are a short-term trader, I would strongly suggest exiting most US stock positions.

Click for PDF version

Filed under Bonds, Commodities, Dow Jones Industrials, Platinum, S&P 500, Silver, Stocks, US Dollar by editor

Facebook Google+ Twitter Pinterest

Email Print

July 18, 2016

Weekly Update 15-July-2016

This was a generally up week, with all asset classes rising except for the Japanese Yen, which dropped 2.9%, and the long term bonds (TLT), which fell 1.6%. Cotton, up 15.2% and palladium, up 9.0% were especially strong this week.

The strongest currencies were the Pound Sterling, which rose 4.2%, the Canadian Dollar, which gained 2.9%, and the Euro, which added 2.5%. In spite of its drop this week, the JPY remains the only government-issued currency that is up from one year ago – though by just 1.0%. Bonds were mixed, with the the short term SHY gaining 1.8% (considerably less than USD cash, which gained 2.1%) while the long term TLT fell 1.6%.

Equities were all in the black, led by the Euro STOXX, which gained 6.6%, and the Japanese Nikkei 225, which rose 6.1%. The weakest markets were gold stocks, which rose just 0.6%, and the S&P 500, which added 3.6%.

Commodities were all higher. Cotton showed the largest rise, gaining 15.2%, but the metals also performed well, with palladium up 9.0% and copper up 7.2%. Platinum was the weakest commodity, rising a respectable 3.0%.

Although not part of the weekly asset chart, interest in the UK's exit from the European Union, and what that will mean for Great Britain economically, has prompted me to start following the GBP and FTSE 100 Index, and I have added pages for these to the site for your viewing pleasure.

Pound Sterling Since 2011

The Pound hit it's 25 year low of 26.3 mg in late 2011, and rallied only slightly during 2012. In 2013Q2, it began to rise strongly, and added to those gains throughout 2014 and 2015 to finish 2015 at 43.3 mg, about 65% above the 2011 low. 2016, however, has been pretty much a downhill slide, with the GBP losing 23.3% so far YTD. The recent drop due to concerns over "BREXIT" continued this trend, leaving the Pound roughly where it was back in 2012. The only other currency I follow that is in a similar position is the Canadian Dollar. Although the Euro, Swiss Franc and US Dollar are all down hard so far in 2016, they are all still well above their 2011-2012 levels; in fact they are roughly at their 2013Q2 levels.

The FTSE 100 has certainly been volatile lately, but has not been particularly hard-hit. Although down for the year to date, it is trading at about the level of 2013Q1, well above its 2011 lows.

It will be interesting to follow the British experiment with independence from the EU. It will certainly bring challenges, but it will also bring many opportunities. And the British people have historically been pretty good at recognizing and seizing on economic opportunity.

Click for PDF version

Filed under Bonds, Commodities, Cotton, Platinum, Stocks, US Dollar by editor

Facebook Google+ Twitter Pinterest

Email Print

July 14, 2016

Stock Market Hits New High? Not So Fast!

News headlines proclaim that the US stock market indexes like the Dow Jones Industrial Average and the S&P 500 are hitting all-time highs. And this is true, when measured in US Dollars. But measured in Gold? Here are my thoughts on this topic.

As you may have noticed, while I love using gold to measure the value of things, I am also very excited about the new monetary experiments going on these days, usually referred to as crypto-currencies. The oldest and largest of these is Bitcoin. But the youngest, and one of the most exciting, is Steemit. Steemit is a social media site similar to facebook, reddit or wordpress that pays its users (those who create content and curate content by commenting and upvoting to bring worthy items to the attention of other users) with a new crypto-currency called STEEM.

I will be publishing more of my thoughts and commentary under the pricedingold tag on the Steemit platform, while the Priced in Gold website will remain the place to find charts and my weekly updates. You can follow me at @vollumc on Steemit if you'd like to have more frequent updates and read about some of my other interests.

I would also suggest that you give Steemit a try, yourself! I firmly believe that Priced in Gold readers are some of the most literate and forward-looking people around. Why not share your expertise and thoughts with a wider community, and get paid for doing so? And if you haven't dipped your toe into the crypto-currency pool yet (or even if you have!) Steemit is a great way to get in on the ground floor of a new coin at no cost.

I hope you'll join me there!

Filed under Bitcoin, Dow Jones Industrials, Stocks by editor

Facebook Google+ Twitter Pinterest

Email Print

July 11, 2016

Weekly Update 8-Jul-2016

Currencies and short-term bonds continued their tumble, while stocks and commodities were mixed. The week's biggest losses were in crude oil, off 8.3%, and copper, down 5.1%. The UK FTSE stocks were also hit hard, losing 5.0% for the week. The largest gains were in gold stocks, which moved 3.7% higher, and platinum, which rose 3.0%.

With the exception of the Japanese Yen, which rose 1.0%, all other currencies were lower, led by the Pound Sterling, which fell 3.3%, and Bitcoin, which lost 2.8%. Bonds were mixed, with the short term SHY dropping 1.0%, while the long term TLT gained 1.3%.

US large cap indexes were little changed, but gold stocks continued to climb, gaining another 3.7% this week. European and Japanese equities fell by 3.1% and 2.7% respectively. As mentioned above, British stocks were the hardest hit, falling 5.0%.

Commodities were mixed, with crude oil and copper down hard, while platinum rose sharply. Silver and palladium took a breather after the prior week's big gains, rising 0.5% and 0.3% respectively.

Click for PDF version

The Dow Jones Industrials are now firmly below their long term (36 month) moving average. This has been a reliable bear market indicator for the index since 1900. The last time this "sell" signal occurred was in September of 2001, when it marked the start of an 11.5 year, 77% drop from 945 grams to 261 grams. Since the last "buy" signal in February of 2013, the Dow has risen from 261 to 417 grams, a gain of 60%. This would be a good time to cut back on conventional stock positions, taking some winnings off the table and into the safety of gold.

Click for PDF version

Filed under Dow Jones Industrials, monetary universe, Platinum, Silver, Stocks by editor

Facebook Google+ Twitter Pinterest

Email Print

July 10, 2016

Weekly Update 1-Jul-2016

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.)

The last two weeks have been dominated by fallout from the UK vote to leave the European Union. The markets didn't expect this, and have been trying to determine what (if any) changes in value will follow from this event. Currencies have all been hit hard, starting with the Pound Sterling (down 11.7% the morning after the vote, and down a further 4.4% this week). The Euro was next, losing 2.9% for the week ending 6/24, and dropping another 2.1% this week. Bitcoin was also hammered for the week ending 6/24, down 12.7%, but stabilized this week, off just 0.2%. In perspective, though, this 13% drop is just giving back half of the 27% gained the week before.

USD bonds were mixed, with short term SHY falling 1.7% this week, on top of a 1.8% loss the previous week, while the long term TLT rose 1.6% this week, almost canceling out the prior week's 1.8% drop.

Stocks recovered this week, after getting slammed by the British exit vote last week. The exception was gold miners, with the HUI rising 2.8% on the news last week, and following through with a 6.9% rise this week. For the week ending 24-June, the UK FTSE dropped 4.7%, as did the Japanese Nikkei, but not as far as the Euro STOXX FEZ, which fell 7.5%. This week, all stock indexes were higher, mostly recouping about half the prior week's drop. The FTSE was up 2.4%, FEZ rose 3.0%, and the Nikkei was 3.2% higher.

Commodities were mixed, with cotton continuing to slide lower (down 2.0% on 24-Jun and down 1.1% for 1-Jul). Coffee whip-sawed, falling 4.4% and then rising 4.8%. Crude oil fell 2.6% on he LEAVE vote, but recovered 1.0% this week. Other commodities, especially precious metals, were strong both weeks, but especially this week, with palladium gaining 7.1% and silver rising 5.7%.

Click for PDF version

Filed under monetary universe by editor

Facebook Google+ Twitter Pinterest

Email Print

June 21, 2016

Weekly Update 17 Jun 2016

The big news this week was Bitcoin, which exploded higher, rising 27.6% to close a hair above 18 grams. Bitcoin is now 173.8% higher than this time last year! The second largest gain was in coffee, up 1.6%. The weakest assets were palladium, off 5.3%, and Japanese stocks, which fell 4.8%.

Most government-issued currencies were lower, led by the Canadian Dollar (down 3.7%) and the Euro (off 2.1%). Only the Japanese Yen managed to gain value, rising 1.0%. US Dollar cash declined 1.2%, short-term bonds fell 1.1%, while long-term bonds were down 0.6%.

All equity indexes were also lower, led by the Nikkei 225, off 4.8%, and followed by the Euro STOXX which dropped 4.5%. The HUI gold stocks fell 2.8%.

Commodities were mostly lower, but coffee continued the prior week's rally, rising a further 1.6%. Copper was little changed for the week, up 0.1%. Both platinum group metals were hit hard, with palladium falling 5.3% and platinum sliding 4.0%. Crude oil continued to slip lower, off 2.4%. Silver held onto most of the prior week's gains, giving up 0.9% for the week.

Looking back over the last 12 months, only five asset classes are in the black, and one more (silver) is just a hair above break even. The big winner is Bitcoin, up 173.8%. In second place are the HUI gold stocks, up 31.2%. Rounding out the field are the Japanese Yen, up 8.0%, TLT long term bonds, up 7.4%, and coffee, up 1.4%. The biggest losers of the past year were palladium, which fell 33.7%, copper, off 28.0%, crude oil, down 26.9%, and the Euro STOXX, which lost 23.7%.

As I write this post, Bitcoin has pulled back to about 16 grams, a little more than half an ounce of gold. Although my earlier prediction that 1 BTC would buy 1 ounce of gold by the end of 2015 was premature, I still think we will see that price level eventually, possibly in the coming 12 months. We are more than half-way there already!

Click for PDF version

Filed under Bitcoin, Bonds, Coffee, EUR, Platinum, Silver, Stocks, US Dollar by editor

Facebook Google+ Twitter Pinterest

Email Print

June 12, 2016

Weekly Summary 10 Jun 2016

The only rising asset classes this were coffee, up 4.8%, and silver, which gained 4.6%. All the others declined, led by copper, down 7.0%, and the Euro STOXX, which fell 6.5%. The next largest losses were in the Chinese Yuan, which dropped 4.8%.

All government-issued currencies were lower, led by the CNY, followed by the USD (off 2.7%) and the JPY and EUR, which each declined 1.4%. Short-term bonds fell 2.6%, while long-term bonds were down 1.6%.

All equity indexes were also lower, led by the Euro STOXX (down 6.5%). The S&P 500 fell 2.9%, while Japanese stocks dropped 1.6%. The HUI gold stocks had the smallest losses, falling just 0.9%.

Commodities were mixed, with coffee and silver showing the week's only gains – and strong ones, up 4.8% and 4.6% respectively – while copper had the week's largest loss, down 7.0%. Platinum fared better than palladium, falling 1.1% to Pd's 2.7% loss.

Since the end of trading on Friday, Bitcoin has gone on a tear. As I write this, 1 BTC is trading for 16.68 grams, up 18% in the last two days, while silver, platinum and palladium are all slightly lower.

Click for PDF version

Filed under Bitcoin, Bonds, Coffee, Commodities, EUR, Platinum, S&P 500, Silver, US Dollar by editor

Facebook Google+ Twitter Pinterest

Email Print

June 9, 2016

Reader Question: Going Up, or Down?

Reader Ray Boyd asks, "How does one determine if a certain commodity or item is going up in value priced in mg or grams of gold?"

This is a foundational question. When you buy any asset, you are either selling gold to pay for it, or getting the funds from elsewhere and passing up the opportunity to store those funds in the form of gold. Either way, the asset purchased has a "gold cost".

You can calculate this cost by taking the fiat currency price of the asset, and dividing it by the fiat currency price of gold. Note that you want to match these prices as closely in time as you can. For daily pricing, I usually use the London PM fix, but if you can narrow the price down to the moment of the transaction, that would be best.

Let's look at an example, using the Dow Jones Industrial Average on Friday May 27th, 2016. On that day, gold was quoted in London at $1,216.25 per ounce. Since one troy ounce of gold weighs 31.1035 grams, the price of one gram of gold would be 1216.25/31.1035 = $39.1033. But more importantly, the price of one US Dollar would be 31.1035/1216.25 = 0.02557 grams of gold. This could also be written as 25.57 mg of gold.

On that day, the Dow closed at $17,873.22, and since each of those dollars was worth 0.02557 grams of gold, the price of the DJIA was 17873.22*0.02557 = about 457.1 grams of gold.

On Wednesday June 8, 2016, the Dow closed at $18,005.05, 0.74% higher than the close on May 27th. But gold was also higher, fixed in London at $1,263.00 per ounce. This means that each US Dollar was worth 0.02463 grams of gold (31.1035/1263). Thus the price of the DJIA was about 443.4 grams of gold – 3% lower than its price on May 27th.

In other words, you would have had to sell 457.1 grams of gold to buy the DJIA on May 27th, but if you sold those shares on Jun 8th, you would only be able to buy 443.4 grams of gold with the proceeds. This is a 3% loss.

Technically, when you buy an asset, you pay the seller's asking price to get it. And when you sell your gold to raise those funds, you take the highest bid price for it. In some assets, there is a big difference between these bid and ask prices; in gold however, the spread between bid and ask is usually very small because of the massive volumes and tremendous liquidity of the gold market. During normal times, it is safe to ignore this spread for pricing purposes… but keep in mind that in a true currency crisis or panic, markets will not be functioning normally, and spreads – even for gold – could become significant.

What is really happening in this case is not uncertainty about the value of the gold, but uncertainty about the value of the dollars! In fact, gold holders may not be willing to part with their metal for any number of dollars. This is exactly what happened a few years ago in Zimbabwe, and it can happen here, too – for any value of here!

It is easiest to see these changes when the numbers are plotted on a chart. Then it's obvious that prices are rising or falling (or more or less staying the same) over time. I use a spreadsheet containing historical gold prices and asset prices to draw the charts on this site. You can do the same, or you can use a web service like stockcharts.com to plot the ratio of a stock symbol to $GOLD. This will chart the prices in ounces, which for low-priced stocks will be very small numbers, but the shape of the chart will be exactly the same as it would be if measured in grams or milligrams. Example: DJIA in ounces of gold

Filed under Dow Jones Industrials, price of gold, US Dollar by editor

Facebook Google+ Twitter Pinterest

Email Print

June 8, 2016

Weekly Update 3-Jun-2016

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%

The weakest government-issued currencies were the Canadian and US dollars, falling 2.2% and 2.0% respectively. As mentioned above, the Chinese yuan was the only fiat currency to rise for the week. Long-term bonds rose 0.8%, but short-term bonds fell 1.7%.

All equity indexes (other than gold stocks) were lower, led by the Euro STOXX (down 2.4%). The Dow Industrials fell 2.3%, while Japanese stocks had the smallest losses, dropping just 1.5%.

Although coffee managed a nice 2.7% gain, all other commodities were lower, led by crude oil. Of the metals, silver and platinum were hardest hit, while copper and palladium showed smaller losses.