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.
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.