War, famine, pestilence, terror… none of it is a proper fundamental for gold. Gold is a monetary asset. The dumbest of money fleeing to it because war is in the headlines is not a fundamental. It is a knee-jerk, the likes of which are usually reversed in due time, all other things being equal. That is not to minimize the attack or the human blight that war is in general. It’s just the way it is. Always beware those using anything non-monetary as a way to promote gold’s investment case.
Oil could be a different matter beyond the knee-jerk. But is probably not. Energy companies and Defense contractors are also popping. In other words, man and machine are doing the knee-jerk thing. I don’t want to predict if or how soon these jerks will fail. But I do want to illustrate a classic setup for moves that may not be sustainable. If the effects of war are persistent and strategically affect certain areas, oil prices may be disrupted to the upside, defense contractors may find new revenue streams and so on.
Gold and gold stocks, already deserving of a bounce per analysis leading to this point, are up in pre-market and stocks are generally down on the alarming events. Try to minimize the emotion of the flash point and its knee-jerking. The fundamental situation for gold/miners was not good going into this weekend and it is no better coming out of it. Depending on how this war unfolds, the macro should settle down within days as the jerking fades.
