With the LDP winning in Japan over the weekend, the next stage in Japan blowing up is likely to begin. The Yen had a big move in the past month and now sits right at the important 84 level, with momentum suggesting that the path of least resistance is higher. But, with a meaningful jump from 78 already in the books, I wouldn’t be shocked if there is a bit of a rest in the price action. My FXY put options still have a month to go, but I’m not banking on making any money there – it was a small speculation to keep me focused.
The other interesting piece, albeit not watershed, has been the rise in JGB yields over the past week – from 70 bps to 77 bps on the 10-year. Still near all-time low levels, but a big move relative to what we’re used to. I’m not rushing to do anything there.
A number of guys that I follow think that Mongolia has bottomed, following a rash of negative news in recent quarters around government backtracking on the Oyu Tolgoi agreement. I hold the same positions that I did before, just at lower price levels, with no plans to tweak exposure.
I like gold and think it will move higher in the first quarter of 2013. While the gold stocks will eventually catch up, the psychology around them continues to be negative, so I only want to play that move through the metal itself. I still hold some LEAP positions for a couple of the miners that expire in January 2014 – and they all doubled or tripled, only to take a round trip back down in the past couple of months. My exposure there also will not change.
