Today I prepared for you the year-to-date comparative dynamics of the metals versus the top financial instruments including the Dollar Index, crude oil and the S&P 500 index.
Chart courtesy of TradingView.com
As seen in the above graph, half of the instruments started the year on an upbeat tune, lead by Silver and followed by Gold, Platinum and the Dollar Index. The other half started with a nose-diving fall, especially crude oil followed by Copper, Palladium and the S&P 500 bringing up the rear.
The second quarter has become a game changer for these instruments. Almost all of them entered the green positive territory except for the metals Platinum, Palladium and Copper; the latter had an unusually huge mis-correlation with crude oil.
In the 3rd quarter, as the Chinese meltdown flooded the media with articles, the instruments that were falling in preceding quarters crashed further, and the lucky ones followed the crowd down, down, down. All except the king currency. So if you had bought anything from this list save for the Dollar Index, you would be in the red, and you would be distressed that you didn’t just keep your savings in cash.
As you can see the Dollar Index has yet to be in the minus column so far this year. Looking back, the best option was buying the Dollar against the basket of currencies compared to other options with nice 5% profit YTD.
There are clearly three distinct groups of instruments based on their dynamics. The worst performing group I would call the "industrials" because all of the instruments are essential elements of our life. The worst performer in this group is Palladium followed by Platinum, which represent the automobile industry.
Catching each other in the "snake games," crude oil and Copper make up the second group and have vital importance globally. Such losing stakes in this group tell me that world production is in doubt.
The next group that is higher but still losing overall is the so-called “elite” group. The S&P 500 is the leader of this group with a -4.75% loss; the next is Gold with a -6.62% loss and Silver locks up the group with a -8.50% loss. It is very interesting that these safe haven assets are the same group with a risk appetite asset by YTD dynamics. It looks like investors are willing to unwind their positions in almost everything to convert it into cash. But I think we will have a busy fourth quarter and one of these groups could still hit the green zone by the end of the year.
Among the metals, Gold is still the self-evident leader, but the ultimate winner is again the Dollar. Just like last year when it was the only currency to beat Gold, this time I widened the range of assets and the Dollar is in yellow jersey again.
INO.com Contributor, Metals
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.