Blain’s Morning Porridge October 8th 2025 – Risks, Uncertainty and Gold drive Market past the Tremblor stage…
“Golden words he will pour in your ear, but his lies can’t disguise what you fear..”
We’ve seen all the signs of crisis to come. Exuberant markets priced for perfection, valuations at mindboggling levels, AI spending trillions to make millions. Yet Gold, the universal risk-off asset just hit $4000. Wake up, smell the coffee…. While you still can..
I’ve been saying buy gold for 2 years. I am unbearably smug this morning.
Timing markets is seldom a rewarding practice. Often the moment to buy an overlooked genius trade is well before you first think about it. Equally often, a brilliant insight on something unsustainable is entirely unrecognised by the market, which will continue to propel the offending stock higher. There is little upside from trying to predict the madness of crowds or the direction of a shoal of herring. (Did you know herring communicate their ever-changing direction by “breaking wind”… just like some markets I’ve worked in.)
However, the are signals that do give hints and indications of what might happen next. There are what I call “Judder Moments” when something fundamental appears to happen that could change the future direction of markets. I use the term “Tremblor” – the milder shaking of the ground that often prefigures a major earthquake – to describe market wobbles than might precede a sudden, shocking market flip.
So, how should I describe the current market?
How about AF. Arterial Fibrillation – AFib? When gold prices double in just 2 years.. you have to wonder…
AFib is the rapid irregular beating of the heart that might warn of cardiac trouble ahead in the form of anything from a heart-attack, a stroke, or maybe just some light-headedness. AFib is a warning of just how damaged the human heart may be. Having experience of a dodgy ticker, I wear a somewhat naff iWatch Ultra rather than a proper sailing watch! It bleeps when it goes wrong – and tells me to go to hospital. My chum, a leading heart surgeon, tells me it’s a brilliant piece of kit. You can ECG yourself! Fortunately, its only bleeped twice in the last few years and both times I was found to be in fine fettle.
There are a lot of danger signals warning of danger out there this morning – which is why I am watching for signals of Financial AFib:
- Gold topping $4000 is the clearest signal. A judder, a tremblor, a 3.9 shake on the Richter scale. Gold bugs have seen better returns than stock-pickers this millennium. Gold tells a very clear story the market is nervous. On the dollar, on Trump, on valuations, on conflict – you name it. The price of Gold is a measure of how the market perceives uncertainty, instability and stupidity. At a time when the market is increasingly fearful for the US dollar, inflationary threats, hegemonic change and broken alliances… of course its rising.
The question to ask: is it possible Gold is over-estimating the current risks? Could it be overbought? Is it time to hedge? Central banks and ETFs are still buying gold. I’ve seen 1-year gold targets hiked this morning to $4900. I’m reckoning $5000 is now in sight. Sticking with the Gold Long.
- Earlier this week I was lectured by a crypto-shill about how BTC is digital gold. It was the usual snake-oil pitch – it’s better than gold because it’s even rarer, and if everyone puts even 1% in their portfolios, then its going to infinity because there are so few of them.. Interestingly… while gold soared, Bitcoin fell in line with stocks. Check for yourself, but Gold and Bitcoin are not well correlated, (0.3), despite all the claims Buttcon is digital gold. It’s more closely correlated to US stocks, (0.6), meaning if you believe the world is a risky and uncertain place… buy delicious buttery gold rather the rancid margarine that is crypto.
How BTC now performs could make or break it. The market has a choice. In a risk off market do you buy gold, do you buy crypto, or do you buy both? Some say diversity is good. But, history and flows show gold has worked for millennia as the risk-off asset. Crypto… not so much. As flows now accelerate into gold, its entirely possible there will be flows out of crypto, especially if its tendency to follow stocks and other financial asset continues.
- Given that the US government Shutdown means a dearth of economic data, Bloomberg highlights how The US Private Capital giant Carlyle produces its own economic data to feed its market hunches. It reckons September’s job numbers would have been dire – a mere 17k new jobs, the weakest print since Covid. While the payroll data estimates are weak, the economy still looks robust. Are there reasons to fear recession or inflation coming down the line? That is quintillion dollar question.
Trouble ahead on the shutdown. The Fed can use the lack of data to hold off on cuts, citing the currently resilient economy. That could tip the stock market’s current confidence. Trump’s MAGA Republicans are getting considerable pushback on their attempts to blame the Democrats for the shutdown. That is likely to extend its duration as he seeks to prove himself right.
- The AI bubble looks increasingly incestuous. The market has spotted the circular inconsistency of a loss-making start up (valued at $500bln) announcing spending plans of over $1 trillion for kit and infrastructure which will be funded by the same kit suppliers. Folk are wondering just how monetizable AI is, but not enough people are asking if the hyperscale, chip and data-centre, power hungry closed-weight model of OpenAI actually makes much sense.
Gosh? A bubble in tech? Who would ever have thought…. Wake-up. Smell the coffee. Read about the Dot.com crash – here’s a link. History does not repeat but the same lessons resonate through time, time and time again.
- The Private Credit market has taken a significant wobble as the spaghetti of funding at the core of the failed US First Brands group becomes apparent. Imagine my shock and surprise to discover (US readers – sarcasm alert) that a former exec of the well-dodgy and failed Greensill receivables business is at the heart of UBS’s investment in the firm. My day job is in the rather untransparent private credit markets – and the vibe is there are lots of deals that haven’t quite performed as expected…
0Private Capital Markets are here to stay, but there has been plenty of new money and new players seeking entry. Standards have slipped – as they always do when the pursuit of returns overtakes common sense. If nervous holders start to panic, then there will be plenty of decent private assets ripe for bottom fishing.
And for spice here are few more bits to think about:
- When market analysts turn psychoanalysts and suggest the retail market’s animal spirits (aka: persuadability) are listening more to promises of more rate cuts to come, AI upside and unlimited crypto gains… and will therefore drive a “melt-up” rally through year end…. It’s probably time to make sure the heating system in the bunker is working.
- Tesla launched its new cheaper Model 3 last night. It’s a more basic car, but is designed to keep Tesla’s affordable now US EV subsidies are done. The stock crashed 4.5% on the basis Tesla is not only old EV tech, but now they are cheap EV tat. BYD is outselling Tesla 2:1 in European markets. When will the market wake up to Tesla not being worth $40 – which is a lot less than $400? Meanwhile, Nvidia is funding Musk’s xAI to the tune of $80 bln to buy Nvidia chips….
- The crypto firm that launched Donald Trump’s $Trump meme-coin the day before his inauguration is launching a $Trump Treasury company. It’s trying to raise $1bln to fund purchases of the coin, which reached $44 soon after launch, and now trades at $8 (and that’s only in the hope Trump might invite holders to dinner.) Course it makes sense – only 1 billion $Trump coins will be issued, so clearly that degree of shortage means they much be worth??? (Clue – what is the square root of F*** All?)
Yep, it’s a funny old market out there. Hard hats to the ready. October is always the unkindest market month….
Out of time, and off to do the day job…
Bill Blain
CEO – Windshift Capital
Author – The Morning Porridge
Partner – Shard Capital
