January 23, 2017

Weekly Update 20 Jan 2017

The last two weeks have seen a steady downtrend in government-issued currencies, bonds, and major stock indexes, along with violent swings in Bitcoin and mixed gains and losses in commodities. This week's biggest winner was Bitcoin, which gained 7.0%, mostly offsetting the prior week's 8.9% drop. Coffee was also strong, rising 1.7% on top of the prior week's 3.2% gain. The week's largest losses were in copper, which gave up 3.2% against the prior week's 4.3% gain.

All government-issued currencies were lower, led by the Canadian Dollar, which dropped 2.2%. The Japanese Yen fell 0.9%. The CNY fell least, dropping 0.2%, but this follows a dismal performance the prior week, where the CNY fell 1.3%, more than any other national currency. Bonds were lower, with USD cash and the 1-3 year SHY each losing 0.8%, and the long term TLT falling 2.0%.

Major stock market indexes were also all lower, led by the Nikkei 225, off 1.7%. In the US, the Dow fell 1.1% and the S&P 500 fell 1.0%. Gold stocks were the only rising equities, with the HUI gaining 0.8% to close at 5.25 grams, about where it closed two weeks ago.

Commodities were mixed; the largest gains were in coffee and palladium, up 1.7% and 1.1% respectively, while the biggest losses were in copper and platinum, down 3.2% and 1.7% respectively. Silver was little changed at 0.44 mg.

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January 8, 2017

The Dow from 1,000 to 20,000

I have been hearing a lot about the Dow Jones flirting with the 20,000 level this week. In fact, on Friday it hit 19,999.63 during the day, but fell back to close at 19,963.80. I'm pretty confident we will eventually see this benchmark reached and surpassed, as we have seen many others in the past: 1,000 in 1972, 5,000 in 1995, 10,000 in 1999, 15,000 in 2013, and so on. The problem with all these "magic levels", and indeed with all USD prices in general, is that they do not use a consistent unit of measure. $1 in 1972 bought a whole lot more gold, silver, oil, gasoline, bread, eggs, taxi fare, or almost anything than $1 did in 1999 or $1 does today. The "Five and Dime" that I grew up with is now the "Dollar Store".

This blog is about gold as a standard of value. Not because gold is perfect, but because it has stood the test of time, both as cash money and as a measure of value, for thousands of years – while hundreds of other currency systems have come and gone. And until 1971, it still underpinned the US Dollar itself, and through the Bretton Woods agreements, it indirectly underpinned all other government-issued currencies as well. After that point, all currencies were cut loose from gold and floated freely against one another, but more importantly, the last tie between money and real stuff was cut, and governments and central banks were finally free to create as much currency as they wanted – without ever having to worry about how they would redeem it for something real.

Certainly the years leading up to 1972 and the Dow breaking the 1,000 barrier were full of ups and downs, but they were real booms and crashes. From 64 in 1921 to 381 in 1929, and back down again into the depths of the Great Depression, for example. Not until 1954 was the 1929 high seen again. And due to the 40% devaluation of the Dollar in 1933, the Dow would not recover its 1929 gold value peak until 1959.

Breaking the 1,000 barrier in November of 1972 was an emotional moment for traders on the floor and investors around the world. It seemed to mark a new era of prosperity, even as, behind the scenes, inflation and recession were preparing to set in. At that time, Dow 1,000 USD meant Dow 482 grams of gold, and through the rest of 1972, the Dow traded between 480 and 500 grams. But early in 1973, things started to come unglued: stock values were falling, but the Dollars used to quote those prices were falling as well (gold prices were rising) eventually pushing the Dow down to an all-time low of 37 grams in 1980. Stocks recovered their value much faster than did the depreciated Dollars. By the time the Dow had regained the 1,000 USD level in 1982, it was still worth only 80 grams of gold.

But stocks, and the economy in general, were on the march… in fact, from those lows in 1980, the largest bull market ever seen was underway. When the Dow hit 5,000 USD in 1995, it was trading for 408 grams – still not recovered to its 1972 value of 482, but more than 10 times its value at the lows of 1980. And by late 1996, it had passed the 500 gram level and was heading for the sky.

And despite a few stumbles, it crossed the 10,000 USD threshold in March of 1999, at 1110 grams of gold, and went on the peak at 11,326 USD, or 1393 grams of gold in August of 1999. As the tech bubble popped, and the plunge protection team pulled out all the monetary stops, stocks once again were falling just as Dollars were also losing value. And all the way down, even when the Dow was rising in USD terms, the value of the USD was falling even faster: the Dow peak of 14,165 in 2007 was worth 600 grams, and at the bottom, in August of 2011, the Dow was worth only 180 grams, and trading for 10,855 USD.

From there, we have been in an amazing bull market, both in stocks, and in the US Dollar. This has pushed the Dow to almost 20,000, and brought its gold value back to about 530 grams – far above the 2011 low, but only 10% above its gold value when it first crossed the 1,000 USD threshold in 1972.

An important question going forward is whether we are now following the trajectory of the early 1980s (on our way to the moon again) or if we are instead channeling the spirit of 1974 to 1977 (a major bear market rally, on our way to a retest of all-time lows). Keep reading these pages to see how this story turns out! But keep in mind that despite today's sky high USD valuation, the gold value of the Dow is roughly the same as it was back in 1972, when it was quoted at 1,000 Dollars for the first time.

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Weekly Update 6 Jan 2017

The first week of 2017 saw mixed results in every asset category, but currencies were mostly lower, while commodities were mostly higher. The week's biggest winner was palladium, which gained 8.6%. Gold stocks were also strong, rising 6.3%. Bitcoin displayed the most fireworks, shooting up to a new all-time high of 30.2 grams on Wednesday the 4th, then collapsing 21.5% to close the week down 8.1% at 23.7 grams. This drop was blamed by some on a Chinese central bank press release and by others on US speculators, but after almost doubling in the last year, a 22% pullback is hardly out of order, whatever the reason. In fact, Bitcoin could drop to the 18-20 gram level and still be above its rising trend line.

All government-issued currencies except the Canadian Dollar (up 0.3%) were lower, led by the US Dollar, which dropped 1.4%. The Euro fell 1.0%. The CNY fell least, dropping 0.4%. Bonds were mixed, with the 1-3 year SHY losing 1.5%, and the long term TLT closing unchanged for the week.

Major stock market indexes were mixed, with the Euro STOXX dropping 1.1%. while the Nikkei 225 rose 0.8%. In the US, the Dow fell 0.4% and the S&P 500 gained 0.3%. Gold stocks dominated the equities, with the HUI rising 6.3% to close at 5.2 grams.

Commodities were mostly higher; the only exceptions were crude oil, off 0.9%, and silver, down 0.1%. Palladium was the biggest winner, rising 8.6%, followed by platinum, which rose 4.2%. Copper was little changed, up 0.2%.

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January 2, 2017

Weekly Update 30-Dec-2016

The last week of 2016 left most asset classes lower, with two glaring exceptions. The week's biggest winner was gold stocks, which gained 5.4%. Bitcoin also continued to rise, adding another 2.2%, and closing at 25.8 grams. Palladium and silver also rose, but just 0.9% and 0.7% respectively. All other asset classes were lower, led by the S&P 500 and Nikkei 225 indexes, which lost 3.5% apiece.

All government-issued currencies were lower, led by the US Dollar, off 2.4%. The Euro fell the least, dropping 1.6%. Bonds were also lower, with the largest losses going to USD cash, while the 1-3 year SHY lost 2.3%, and the long term TLT fell the least, down 1.5%.

All equities except gold stocks were lower, led by the S&P 500 and Nikkei 225 indexes, off 3.5% each. Among the major indexes, the Euro STOXX were the least weak, dropping 1.6%.

Most commodities fell again this week. Only palladium, up 0.9%, and silver, up 0.7%, showed gains. Weakest were platinum, down 2.2%, and coffee, which fell 1.8%. Crude oil was down 1.1%.

Look for more posts coming this week covering the 2016 year in review, and taking a closer look at the Dow Jones Industrial Average and its path to the 1,000 level in 1972 and its subsequent rise to near 20,000 today. In the meantime, I wish you the very best for 2017!

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December 26, 2016

Weekly Update 23-Dec-2016

The week before Christmas was quiet for stocks, bonds, and most currencies, with few assets outside the commodities changing more than 1%. Bitcoin outpaced all other assets, gaining a whopping 17.5% for the week and closing at 25.2 grams. Palladium doubled down on the prior week's drop, losing another 4.9%, clinching the "weakest asset class" title. Gold stocks performed better than any of the major stock indexes, gaining 2.3%, still a distant second place behind Bitcoin.

The only currency to fall was the Canadian Dollar, which lost 1.1%. Bonds were higher, with the largest gains going to the long maturities for a change. The 20+ year TLT gained 1.1%, while the 1-3 year SHY gained 0.2%, and USD cash was little changed, up just 0.1%.

All equities were higher, led by the HUI gold stocks, which rose 2.3%. Next strongest showing was by the Euro STOXX, which rose 0.9%. The S&P 500 were the weakest equities this week, rising just 0.3%.

Commodities were hit hard this week. Only crude oil, up 2.2%, and platinum, up 0.2%, showed gains. The weakest commodities were palladium and coffee, which fell 4.9% and 4.4% respectively. Copper and silver were also lower, dropping 3.4% and 1.9%.

While you are relaxing and enjoying this holiday week with family and friends, take a few minutes to download the free Mining for Profits ebook, and pick up some strategies and techniques for improving your profits next year. Happy Holidays from Priced in Gold!

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December 21, 2016

Weekly Update 16-Dec-2016

This was a good week for most asset classes, with both the best and the worst performances among the commodities. The big winner was coffee, which added 5.1%, reversing it's multi-week losing streak. Palladium took the biggest hit, falling 4.9%. The Fed's announcement of a quarter point hike in interest rates (which was widely anticipated) gave new strength to the USD, pushing it up 2.8%, more than any other currency except Bitcoin, which rose 4.2%.

The only currency to fall was the Japanese Yen, which lost 0.2%. Bonds were higher, but buyers again showed their distaste for longer maturities, as the 20+ year TLT gained 2.5%, while the 1-3 year SHY gained 2.6%, and USD cash outperformed both by rising 2.8%.

All major stock indexes were higher, led by the Dow Jones Industrials, which rose 3.3%. The Nikkei 225, the weakest of the large cap indexes, gained 1.9%. The HUI gold stocks were once again the only falling equities, down another 4.0%.

As mentioned earlier, commodities were the movers and shakers this week. In addition to coffee's 5.1% gain, crude oil rose 3.6% and cotton rose 3.2%. On the downside, palladium was joined by silver, which fell 2.6%, and copper, which gave back 0.3%.

Just in time for the holidays, my friends at Inflation Domination have created a new FREE eBook called Mining for Profits that includes a chapter from Priced in Gold titled "Investing outside the Matrix", where I look at how and why to use gold pricing to improve investment returns, strategies for counter-party risk free investing, and more. There are also chapters on alternative energy, evaluating mining stocks, and trading strategies for maximizing profits. My chapter includes a link to a bonus video going into detail on how to use gold pricing to supercharge profits when trading the stock market. It's FREE to all readers of Mining for Profits. Take advantage of this opportunity, and let me know what you think. Happy Holidays from the crew at Priced in Gold!

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December 12, 2016

Weekly Update 9-Dec-2016

This was a good week for stocks, but mixed for bonds and commodities. The big winner was the Euro STOXX, which gained 6.3% this week on news that the European Central Bank will be extending its low interest rate policy and expanding its quantitative easing programs. US stocks also rallied on the news. Coffee dropped again this week, falling a further 3.6%, the largest loss of any asset class. Gold stocks took the next biggest hit, giving up 2.7%, or about half of their gain from the prior week.

The Canadian Dollar was once again the strongest government-issued currency in the list, gaining 1.7%, followed by the US Dollar, which gained 0.9%. Bitcoin took it easy this week, adding 0.7% to last week's 5.6% gain. The weakest currency was the Chinese Yuan, which lost 0.2%. Bonds were mixed, as buyers again showed their distaste for longer maturities, as the 20+ year TLT fell 0.9%, while the 1-3 year SHY gained 0.8%, and USD cash outperformed both by rising 0.9%.

All major stock indexes were higher, led by the Euro STOXX, up 6.3%. The S&P 500 and Dow Jones Industrials gained 4.0% and 3.9% respectively. Gold stocks were the only falling equities, off 2.7%.

As mentioned earlier, coffee was the weakest asset class this week, dropping 3.6%. Silver made the largest gains in the commodity group, adding 4.6%. Copper resumed its rise, gaining 1.9%, and platinum and palladium were 1.6% and 1.0% higher, respectively. Crude oil took a breather, gaining just 0.5% after the prior week's massive 13.6% jump.

A look back at the last year

We are nearing the end of 2016, and I thought it would a good time to reflect back on the last year's results. Government-issued currencies have all struggled, while the free market digital currency, Bitcoin, has soared, rising 71.2% – more than any other asset class. The Chinese Yuan fell 15.9%, making it not only the worst performer among the major currencies, but also the worst performer of any asset class. Among the major currencies, the Japanese Yen fared best, dropping just 0.8% year over year.

Bonds were down hard, reflecting higher rates and again showing a distinct preference for shorter maturities. The long term TLT fell 8.6%, the short term SHY was off 6.7% and USD cash was down 7.1%.

Equities were mixed. The HUI gold stocks rose 41.9% to take second place among all asset classes after Bitcoin. Europe and Japan fell 12.5% and 2.4% respectively, while the major US markets rallied. The Dow Jones Industrials were up 4.9%, and the S&P 500 gained 2.5%.

Commodities were all higher, led by crude oil, which rose 28.8%. Palladium also made huge gains, rising 24.8%. Platinum, in contrast, was the weakest of the group, gaining just 0.5%. Copper and silver did much better, rising 19.1% and 10.3% respectively.

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December 7, 2016

Weekly Update 2-Dec-2016

This was a good week for stocks, bonds and currencies, but mixed for commodities. The big winner was crude oil, which gained 13.6% this week on news that OPEC is planning production cuts (it remains to be seen how that will work out for them!) While crude oil was flying, coffee has been falling, down another 5.0% this week. Copper was also down slightly, off 0.8% after the prior week's monster 10.4% rise.

The Canadian Loonie was once again the strongest government-issued currency in the list, gaining 2.7%, followed by the Euro, which gained 2.0%. Although not on the list, the Pound Sterling outpaced the other major currencies, rising 2.9%, and the free market currency Bitcoin outdid them all, gaining 5.8%. The weakest currency was once again the Japanese Yen, which rose 0.6%. Bonds were higher, but buyers showed their distaste for longer maturities, as the 20+ year TLT rose only 0.2%, while USD cash and the 1-3 year SHY each gained 1.2%.

All major stock indexes were higher, led by the DJIA, up 1.3%. The weakest major market was the S&P 500, which gained 0.2%. Gold stocks rose 5.6% to close at 4.86 grams, the highest level seen in 3 weeks.

As mentioned earlier, coffee was the weakest asset class this week, off 5.0%, while crude oil made the largest gains, up 13.6%. Copper was down slightly, falling 0.8% after the prior week's huge 10.4% rise. Precious metals palladium and platinum were 3.2% and 2.6% higher, respectively. Silver rose 0.5% to close at 0.43 grams per ounce.

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November 29, 2016

Weekly Update 25-Nov-2016

A generally positive week for all asset types, with only coffee, down 2.3%, gold stocks, down 1.6%, and the JPY, off 0.5%, showing losses. The big winner was copper, which after catching it's breath last week, continued to skyrocket, gaining 10.4% this week. The major stock indexes were all higher, led by the Dow Jones Industrials, which gained 3.5% to close at 501.6 grams. Financial headlines have been filled with stories about this recent series of "highest ever" dollar prices for the Dow… but readers of Priced in Gold know that the Dow has yet to equal it's 2015 high of 523.5 grams, or it's 2007 high of 652.6 grams. And to really get into all-time high territory, the Dow will have eclipse its August 1999 high of 1393.2 grams – 2.8 times higher than today's price. Could that happen? Maybe some day, but probably not soon, and probably not without seeing considerably lower prices first.

The Canadian Loonie was the strongest currency in the list, gaining 2.2%, followed by the US Dollar, which gained 2.0%. Several currencies not on the list were much stronger, though, including the Australian Dollar and the Pound Sterling, which gained 3.1% each, and the New Zealand Dollar, which gained 2.6%. The weakest currency was once again the Japanese Yen, which fell 0.5%. Bitcoin took a breather after last week's 6.8% run, rising just 0.4% this week. Bonds were higher, but showed no appetite for longer maturities, with the long term TLT and short term SHY each gaining 1.9% while USD cash rose 2.0%.

All major stock indexes were higher, led by the DJIA and S&P 500, up 3.5% and 3.4% respectively. The weakest major market was the Japanese Nikkei, which gained 1.8%, again coupled with a falling Yen. Gold stocks were 1.6% lower, giving back about half of the prior week's gains.

As mentioned earlier, commodities were almost all higher, led by copper's massive 10.4% jump. Palladium rose another 4.1%, while silver gained 1.7% to close the week at 0.43 grams per ounce. Platinum was little changed, up just 0.1%. The only commodity to close lower for the week was coffee, which dropped 2.3%.

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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.