Gold, Syria and Which Way Next?

Emerging markets hot money is still taking flight. Hot money that was flowing into emerging markets in recent years has now reversed course along with FOMC policy. It conjures up images of 1997 and the Asian Financial crisis. Those hot money flows have also helped lift gold of late. As Americans it is difficult to understand but in emerging countries gold is something that people reach for as currencies collapse and regimes change. Keep an eye on gold. It may be another temperature gauge with bond yields here in the US.

A Friday before a long weekend with war drums beating may have more than a few investors keeping their wallets on their hips. Investors will be wary as Obama plans his Syria excursion not to mention September’s horrible reputation in investing circles. The G20 meeting next week could further cloud the Syrian question. Would Obama dare attack Syria just before traveling to Russia? I know this isn’t the Middle Ages but I wouldn’t be visiting the Russian campsite while my soldiers were attacking their proxy. We have our eyes on France. France WANTS to go to war in Syria. Hmmm….. Wag the dog perhaps.

Market selloff this month has bounced in recent says. It seems to be of the dead cat variety. Market strength has been met with weak closes. A weak close shows a lack of conviction and further losses might be ahead. Tuesday will be the first day of a new month. A new month brings in new money flows and markets tend to levitate higher. If Tuesday closes lower then the bears are in charge.

September calendar is filled with market moving events as Syria is the tip of the iceberg. Keep calm and carry on. Ghosts from investing past at the moment include the 1997 Asian Financial Crisis and the Crash of 1987. Parallels are being drawn and investors are nervous. Look for values as money has moved to the sidelines in preparation.

Bond yields are still the most important metric. Wars come and wars go. Keep watching bond yields.  While the stock market tends to gyrate wildly bonds have a steadier hand. The critical level is the 3% level on the 10 year. A break of this level could cause anxiety and selling in equities as the Fed may be perceived as losing control of the bond market. Watch the 10 year.

To learn more about us and Blackthorn Asset Management LLC visit our website at www.BlackthornAsset.com .

A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill

Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.

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Published in: on August 30, 2013 at 9:18 am  Leave a Comment  
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