The charts that matter: short-selling, silver and the return of bitcoin

As the online mob gets organised to move markets, John Stepek looks at how the charts that matter most to the global economy have fared this week.

Welcome back.

We had a massive response to Merryn’s interview on Thursday with Charles Plowden of Baillie Gifford, with a record number of readers tuning in to watch the webinar live. One regular subscriber emailed to tell us it was “incredibly insightful and useful… enjoyable, accessible and rewarding”. Plowden also shared some of the stocks he’s most interested in right now. If you missed it, the good news is that you can watch it on demand – tune in here.

In the magazine this week, we have a rare treat for you – Dominic Frisby writes about bitcoin and shares his take on the future of the cryptocurrency. He also explains how to go about buying it. If you’re not already a subscriber, pile in now and get your first six mags free.

Amid all the excitement about GameStop and the uprising of the small investor against the tyranny of the short-selling hedge funds (or rather, just a group of private investors having fun and making money at the same time), we explain what “short-selling” is in our latest “Too Embarrassed To Ask” video. Have a watch here, and let me know what you think at editor@moneyweek.com.

And loosely connected to the GameStop shenanigans –there was a lot of excitement in silver later in the week, when it appeared that the same gang of investors who drove GameStop higher had started targeting the precious metal. Earlier this week, Merryn talked to Jupiter’s Ned Naylor-Leyland on the podcast about this specific topic – silver and the fundamental arguments for it. They also talk about gold, bitcoin, miners, debt jubilees, central banking, inflation – it’s a deep discussion of all of the most important money issues of the day and a lot of the topics that MoneyWeek readers tend to be most interested in – so don’t miss it!

Here are the links for this week’s editions of Money Morning and other web stories you may have missed.

Now for the charts of the week.

The charts that matter

Gold had a remarkably boring week when you consider all the other stuff that went on (particularly in gold’s rather more volatile sibling, silver). It started to perk up towards the end of the week when silver attracted everyone’s attention, but otherwise, there wasn’t much movement to speak of. Being boring at times when everything else is exciting is something of a feature of gold though – it’s what you want it for.

Gold price chart

(Gold: three months)

The US dollar index (DXY – a measure of the strength of the dollar against a basket of the currencies of its major trading partners) ticked a little higher in the past week. As always, the dollar is one to keep a close eye on. The more this rises, the trickier it’ll be for the bull market to keep going. And this is one stretched bull market.

USD currency chart

USD currency chart

(DXY: three months)

That said, the Chinese yuan (or renminbi) continues to hold up against the US dollar (when the black line is falling, the yuan is strengthening).

USD/CNY currency chart

USD/CNY currency chart

(Chinese yuan to the US dollar: since 25 Jun 2019)

The yield on the ten-year US government bond was little changed this week, although it remained above the 1% mark.

US Treasury bond yield chart

US Treasury bond yield chart

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year remained near 0% as usual.

Japanese government bonds yield chart

Japanese government bonds yield chart

(Ten-year Japanese government bond yield: three months)

And the yield on the ten-year German Bund was a little lower.

German Bunds yield chart

German Bunds yield chart

(Ten-year Bund yield: three months)

Copper has seen its relentless advance slow down a little in the past couple of weeks.

Copper price chart

Copper price chart

(Copper: nine months)

Meanwhile the commodities-and-China-dependent Aussie dollar has started to tick lower. These things are worth watching. A drop in demand from China is a risk to the global economy right now, particularly when we’re a long way from being out of the woods as far as the pandemic goes.

AUD/USD currency chart

AUD/USD currency chart

(Aussie dollar vs US dollar exchange rate: three months)

Cryptocurrency bitcoin rebounded sharply towards the end of the week after a steep fall. I’d like to think it’s because it’s on our cover this week (subscribe here), but I suspect it’s more because Elon Musk decided to stick bitcoin in his Twitter bio.

Yes, I know how that sounds – and yes, it’s a clear sign along with everything else that we’re well into the “deranged, you’ll tell your grandkids about this” phase of the bubble – but everyone is hoping that Musk will stick some of his cash into bitcoin. So there’s a sort-of logic to it. Anyway, Dominic actually discusses that in more detail in this week’s MoneyWeek magazine.

Bitcoin price chart

Bitcoin price chart

(Bitcoin: three months)

US weekly jobless claims fell to 847,000, compared to 914,000 last week (revised higher from 900,000). The four-week moving average rose to 868,000 from 851,750 (which was revised higher from 848,000) the week before.

US weekly jobless claims chart

US weekly jobless claims chart

(US jobless claims, four-week moving average: since Jan 2020)

The oil price (as measured by Brent crude) remained above the $55 mark though again, like other commodities, it’s showing some signs of fatigue.

Brent crude oil price chart

Brent crude oil price chart

(Brent crude oil: three months)

Amazon is still trading in that tight range that it's been in since topping out in September. This week it was slipping back down the way.

Amazon share price chart

Amazon share price chart

(Amazon: three months)

Meanwhile Tesla also continued to drift lower. I mean, who needs it when you have GameStop, eh?

Tesla share price chart

Tesla share price chart

(Tesla: three months)

Have a great weekend. Remember to watch Merryn’s interview!

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