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.