Market Update 28 Jun 2013: Crude Oil Soars
Bitcoin was the only falling asset this week, as the US Dollar surged against gold and other currencies, pulling most other assets up with it. Crude oil was especially strong.
Bitcoin gave back about a third of last week's gain, falling 5.5% to close at 2.53 g. Trading volume was slightly higher than last week, averaging about 78 kg per day.
Among the government currencies, the USD was by far the strongest, rising 8.7% to 26.1 mg, while the Euro was weakest, gaining "only" 5.9%. I think we are nearing a blow-off top here, as the USD has gone parabolic over the last few months. You can see this in the chart below. Can it go even higher? Certainly! Have its fundamentals improved in any material way? Absolutely not!
The safest place for your money right now is in physical precious metals, especially gold and platinum. This will help you keep your powder dry for the time when silver, gold stocks, and other undervalued investments have formed their bottoms. You may be taking a "pass" on speculative gains in currencies, bonds, and stocks, but you are doing so to get the security of real assets that are free of systemic and counter-party risk.
Bonds were higher, with the short term SHY gaining 8.7%, mirroring the strong dollar, while the long term TLT jumped 10.7% to close at 2.88 g. This puts TLT near the top of its trading channel, limiting the likely upside from here.
Stocks all rose smartly, even the beleagured HUI Gold Bugs Index, which set a new low of 5.2 g on Wednesday before snapping back to close at 5.95 g, up 7.4%. The Nikkei, the Dow Jones Industrials, and the S&P 500 each rose about 9.6%
Commodities were all higher, led by crude oil, the strongest asset class for the week, which gained 12% to close at 2.52 g/barrel, pushing past resistance at 2.4 g. The weakest commodity was Silver, which set a new low for this move of 0.470 g on Wednesday and Thursday before recovering to close at 0.492, up 3.1%.
This week's extreme readings came in part because the London PM fix on Friday, the official price I use for all my charts, occurred at the extreme low for the day; if I had used the NY close instead, all prices shown would have been about 3.5% lower, putting silver into a loss for the week, and significantly moderating all the other gains.