Gold has had a great year so far: Thru August 22, 2016, it is up 24%*. Compare that to the Dow Jones which is 8% year to date**. That’s all wonderful, but where does Gold go from here? A good indicator is the US 10 Year Treasury. This is the benchmark for interest rates around the world. The current rate for the 10 Year Treasury is just 1.58%. Subtract the inflation rate of 1.00% from that normal rate and you are left with a real interest rate of just 0.58%. When interest rates are low, as they have been, investors are more likely to pour into Gold (and Silver) helping to drive the price of the precious metals up. Conversely, when rate are going up, investors (and guys like me) will chase the upward rates, resulting in most likely lower precious metals prices***.

* APMEX website
** Historical quotes
*** Daily Wealth Trader. August 16, 2016

These are the opinions of Ben Morris and not necessarily those of Cambridge, are for informational purposes only, and should not be construed as investment advice.

Over the past 20, 50, and 100 year periods, September is the only month of the year in which the Dow Jones Industrial Average has closed lower. Over the past 100 years, the DJIA has averaged a decline of 0.96%.

It certainly is possible that the market could move higher this month. However, in addition to the historical data, we have several other factors in place which would suggest a market pullback*:

• Stocks continue to get more expensive.
• Corporate earnings have declined for five straight quarters.
• Insiders have been selling.

Generally, we consider a pullback a 5-10% off a security’s 52 week high as a buying opportunity.

* The Stansberry Digest, September 1, 2016

These are the opinions of Justin Brill and not necessarily those of Cambridge, are for informational purposes only, and should not be construed as individualized investment advice.