Currencies: The December U.S. Dollar Index (NYBOT:DXZ13) closed Friday at 81.675, up 21.8 points on expectations that the U.S. Federal Reserve will "taper" off its monetary stimulus program based on their "assumption" of a strengthening U.S. economy. The higher yields produced are beneficial to U.S. dollar investment attraction and while we disagree with the U.S. Fed’s view we have to consider the impact of its policy on currencies. We prefer the sidelines for now after having been bullish for some time for the dollar but recent changes in our opinion and recommendation for profit-taking leaves us out for now. Resulting losses of other currencies were the Euro 13 points to $1.3340, the Swiss Franc 6 ticks to 41.0809, the Japanese yen 16 points to 0.010259, the British Pound 10 points to $1.5618, and the Canadian Dollar 34 points to 96.46c. the Australian dollar managed a gain of 45 points to 91.14c after recent heavy selling.
Energies: September crude oil closed at $107.46 per barrel, up 13c and for the week gained 5% tied to the violence in Egypt and concern of possible interruption of shipping through the Suez Canal. We continue to feel supplies are adequate but the "fear" of disruption is keeping upward pressure on prices. We prefer the sidelines for now.
Copper: December copper closed Friday at $3.3670, up 2.55c on improved economic conditions in China, the world’s largest user of industrial commodities. Also, the Friday morning report of new home construction in the U.S. and increased apartment building provided short-covering in copper after its extended weakness. Our long term negativity was changed in favor of profit-taking of short positions and we are now on the sidelines.
Precious Metals: October gold closed Friday at $1,372.00 per ounce, up $10.90 for a gain of 4.5%. for the week. December silver, our favorite of the two, closed Friday at $23.20 per ounce, up 21.5c for a weekly gain of 14%. As we suggested recently, for those who must have a precious metal in their portfolio, we prefer silver on the basis of percentage improvement. The psychology of the "transfer" of funds from equities to the usual safe haven of precious metals returned this past week after having been neglected in recent months in favor the treasury market. This week however saw the transition from the treasury market "safe have" back to precious metals. The relationships that had been forgone of late have now seemingly returned to historic "normalcy". We prefer the sidelines but as mentioned earlier, for those that "must have a precious metal," we prefer silver to gold. October platinum closed at $1,527.60 per ounce, down $4.70 but up 1.8% for the week. September palladium gained $6.20 per ounce to close at $763.05 and for the week gained 3%. Our long term preference of palladium over platinum continues intact.
Grains and Oilseeds: December corn closed Friday at $4.63 per bushel, down 9 1/4c on profit-taking after the 4% gain Thursday tied to USDA reduced crop expectations tied to weather impacting plantings on reduced acreage. We prefer the sidelines. December wheat closed at $6.42 ½ per bushel down 6c also on profit-taking after Thursdays gains. We prefer the sidelines here as well. November soybeans closed at $12.58 ½ per bushel, down 7c after gains tied to "abandoned acreage sowings on 1.62M acres. We still like the idea of buying calls on soybeans.