With the Brexit results merely hours away, we should take a moment to consider what should happen with gold and silver following the outcome:
Submitted by Craig Hemke:
The first thing you need to know is that this is NOT a done deal. The assumption since last Thursday is that Brexit will fail…and it likely will. The City of London almost always gets what The City of London wants. To think that the hoi polloi will be allowed to advance an agenda that is NOT in The City’s interests is almost unfathomable, sort of like those believing that a new Glass-Steagall will be passed one day in the U.S.. The Financial-Political Complex overpowers everything through bribery, greed and corruption so to think that popular opinion would be allowed to override them?…Well, it’s a longshot.
That said, the polls remain close and be sure to check this from ZH. As you know, ole Turd knows a little about bookmaking so, to me, this makes perfect sense. Essentially, the bookmaker simply desires equal amounts of money on each side of the wager. The amount of individual bets tells you something about the supposed “smart money” but it can be misleading. What this ZH post shows is that there is a huge amount of individual bets on Brexit but an equally huge amount of money…in much larger chunks…on Bremain. Now why would that be? Does the “smart money” know something that the “squares” do not? Or is someone attempting to influence opinion by placing big bets in order to drive the odds toward Bremain. This is an interesting question to consider in the remaining hours before the vote. http://www.zerohedge.com/news/2016-06-22/something-strange-emerges-when-looking-behind-brexit-bookie-odds
And here’s yet another major English newspaper coming out with an endorsement of Brexit: http://www.dailymail.co.uk/debate/article-3653385/Lies-greedy-elites-divided-dying-Europe-Britain-great-future-outside-broken-EU.html
And don’t forget who reads newspapers and which is the most likely demographic to turn out in large numbers…old(er) people. And which group is most likely to reject the EU in favor of British “patriotism”? Old(er) people. Just sayin’.
So, again, this is far from a done deal, regardless of The City’s desires. Sit tight and be ready. Tonight will be fun!
To that end, let’s now talk about gold and the impact of the vote on paper gold “prices”. It will be easier to discuss this verbally and we’ll attempt to do so in today’s podcast which, God willing, I’ll be able to post before 8:00 pm EDT.
Here’s where ole Turd stands…and this is NOT because “Turd is just a permabull who always says BTFD”. Everything and every scenario says gold is going to rally, NOT plummet. Why? Let’s list a few of the reasons:
- How much “Brexit risk premium” was pumped into gold in the first place? Gold was $1213 and down nearly $100 from its highs before the June BLSBS put an end to the Fed Goon Jawboning Parade. After the BLSBS, it closed June 3 at $1243. It then rallied over the next two weeks, anticipating a dovish FOMC and was $1284 when the Fedlines were released one week ago today. How much of that rally was FOMC-related and how much was Brexit-related? Maybe 80/20? Maybe. In fact, Brexit really only entered as a legitimate possibility early last week. So, considering that gold is now $50 off its peak last Thursday, I think the “Brexit risk premium” is already done, gone and out.
- So this actually puts gold DOWN $16 or 1.3% since the extremely dovish and dissentless Fedlines of last week! What? That’s crazy!! All this does is once again prove the old adage that, if you want to make money trading the metals, you must always “sell some when everything looks great and buy some when everything looks terrible”.
- From an HFT-algo perspective, EITHER vote scenario should be gold bullish. Why? A Brexit vote will dump the euro but surge the yen. This would/could/might blow the USDJPY all the way to and through the 101 target we’ve been discussing. Bond futures will soar worldwide, too, as “investors seek the safe haven of fixed income”. These two combined should drive heavy HFT gold futures buying. But what about Bremain? If this occurs, the Euro will rally…at least it should. And the euro is about 60% of the POSX. A 2-3 point rally in the Euro would drive the POSX back toward 92. After an initial shock, the HFTs and smart human money managers everywhere will begin to focus upon the tumbling Pig and Fed dovishness…as they should have been doing every day since last Wednesday…and you’ll get a quick bounce and recovery from any selling.
- And, in the end, simply look at price and history.
“What does that mean Turd? Please elaborate on point #4.” OK, I’ll be glad to.
Recall what happened in May. Gold surged toward the critical $1308 point? What did The Cartel Banks do? They desperately capped and capped and then brazenly used all of the Fed Goon jawboning as an excuse to ram prices back down and, MOST IMPORTANTLY, cover over 100,000 naked shorts BEFORE The Fed actually announced that they were powerless and neutered. So, as price rallied on the actual news of June 3 and June 15, The Banks were able to control price and keep it below $1308 by issuing back out the same old paper that they had issued in April. So, what has the past 4 days been about? It’s the exact same trick/strategy!
The Cartel Banks have used the Bremain sentiment since the Cox assassination as cover to raid price, drive Specs back out and cover shorts. That way, when price begins to rally again regardless of the outcome, they’ll have shorts to issue as they attempt again to keep price below $1308. See how that works? Just yesterday, we saw an overt raid of $20 and an open interest decline of nearly 10,000 contracts…back to 571,000. With prices down a little again today, who knows how many more nervous-nelly Specs are heading to the exits ahead of the vote.
The point is…Just as in May, The Banks KNOW what is going to happen next. The paper price of gold is going to rally in the days and weeks to come, regardless of the outcome of tomorrow’s vote. Therefore, just as in May, they are desperately using any and every opportunity to scare out some Specs and cover some shorts. Got it? See what I mean? Again, we’ll try to make some sense of all this in today’s podcast.
For now, gold is down $5 as I type and, earlier today, came very close to tapping its 50-day MA and the lower band of our channel…which we’ve been mentioning as a likelihood since Sunday evening. What’s my strategy? Sit back, relax and watch the fireworks. If I can remember tonight, I think I’ll even order another shiny ounce of gold. I mean, why not? Get it while you can! Again, I absolutely expect the 50-day to hold and that the hand-crafted/painted double top on the chart to fail. My target next remains $1340.
And one more thing…As the world moves on from “All Brexit, All The Time”, I though that this little tweet was interesting: