Here come September and October! I’m not superstitious, but from my point of view, the fear about past market crashes occurring in September and October becomes a self-fulfilling prophecy where investors pull out of the market in anticipation of a sell-off, thereby causing a sell-off.

Over the past week, every asset class lost value except gold and bonds. What does that say to me? Investors are seeking a safe harbour, and money is moving from stocks to bonds and gold. As bond values rose, interest rates have fallen. Having said that, the Bank of Canada’s published five-year mortgage rate rose from 5.14% to 5.34%. It doesn’t affect my mortgage, but it reduces the amount that I could likely sell my home for.

Looking back over the recent past, stocks show better momentum than ever compared to bonds. That may be shifting, but for the moment bonds look unattractive. Looking at the various asset classes, gold (IGT) remains at the top, as it did last week. I have owned MG over the past few months, but it has been surprised by a gold producer (IMG) and a silver producer (SLW).

N.B. The TSX is closed for the Labour Day holiday.

Market Outlook September 2, 2013

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