Weekly Update 22 Jan 2021

Bonds and national currencies declined, stocks were mostly higher, and commodities were mostly lower. But the big fireworks this week were in cryptocurrencies, as Bitcoin fell 11.0% and Ethereum rose 4.7%. The next biggest movers were coffee and palladium, which dropped 3.9% and 3.5% respectively.

The US Dollar and the Japanese Yen led national currencies lower, falling 0.7% each. The Euro outperformed, declining just 0.1%. US Treasury notes and bonds fell in sync with USD cash, dropping 0.7% apiece.

The week's biggest price moves were in the cryptocurrencies, as bitcoin fell 11.0% and ether rose 4.7%. The broader index of 30 cryptocurrencies fell 2.2%. Although Ethereum has reached new highs in US Dollar terms, it is still 36% below its old high when priced in gold, due to the US Dollar's weakness. In contrast, bitcoin made a new all-time high on 8-Jan-2021, and has since retreated 18.7%.

Stock markets were mixed, but gainers outnumbered decliners, and rose farther as well. The S&P 500 added 1.2% and gold mining stocks advanced 0.8%. The Nikkei fell 0.3% and the Dow Industrial Average declined 0.2%. On Wednesday 20-Jan-2021, the Dow made a new all-time high when priced in US Dollars… but keep in mind that today's price of 520.4 grams is 62.6% below its all-time high of 1,393.2 grams set back on 25-Aug-1999.

Today's "high" stock prices are all about the debasement of the US Dollar and the distortions of asset prices caused by artificially low interest rates, not about great stock performance. It's a sad commentary on the state of the US economy when the country's 30 largest industrial companies, working as hard as they can for 20 years to create shareholder value, are outperformed by a factor of more than 2x by a lump of metal sitting in a safe. This applies not just to the USA, but to Europe and Asia as well.

The only commodity in the black this week was cotton, up 0.3%. Platinum gets an honorable mention for closing the week unchanged. Coffee fell 3.9% and palladium dropped 3.5%, the week's largest losses outside of the cryptosphere. Crude oil declined 0.9% and silver retreated 0.4%.

Year over year the picture remains broadly the same as in past weeks, with cryptocurrencies continuing to crush it. Ethereum is up 510.1%, bitcoin is up 219.5%, and the CCI index of 30 cryptos is up 139.7%. Outside of cryptos, silver gets an honorable mention for rising 19.7%. Crude oil is still the largest decliner, down 22.6%, but palladium, down 18.4%, edges out the US Dollar, off 16.0%, in the race for next worst performer.

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