Crushthestreet/CTS staff/6-25-2016
“You didn’t come here today for bad news. There’s plenty of that
everywhere you look, and even where you don’t look. So here’s the good news.
A new rush to gold has begun. To see where we’re headed, let’s first see
where we’ve been.”
MK note: This article is a short summation of the forces at work in
the gold market. I think newcomers playing catch-up will find it particularly
useful. Now would be a good time to take a deep breath – make an attempt
to assess what just happened and its likely effects, not just on the global
economy but your own wealth as well (be it large or small).
As reported here copiously over the past few months, the hedge funds have
been far ahead of the curve on Brexit, as have many among USAGOLD’s
clientele. So once again all the talk that no one saw this coming,
i.e., that it was a big surprise, is utter nonsense. A good many saw it
coming and took steps to protect their interests, including private gold and
silver investors. We must remember in all of this though that Brexit is
symptomatic of a larger political and societal trend globally and not simply
an isolated event. (I won’t outline the details here. You’ve probably had
enough of that over the past weekend.) In short, it doesn’t end
here. The investor who is properly diversified with gold and silver
might be surprised by an event like Brexit, but his or her portfolio won’t
be.
MORE. . . .
“Brexit is not the cause and this is not contagion. The latest PEW survey
shows that anger with Brussels is just as great in most of Northwest Europe
as it is Britain, and in France it is higher at 61pc. This referendum was
never a fight between Britain and Europe, as so widely depicted. It was the
first episode of a pan-Europe uprising against the Caesaropapism of the EU
Project and its technocrat priesthood. It will not be the last.” – Ambrose
Evans-Pritchard, The Telegraph (Link)
MK comment: I am not sure what Evans-Pritchard considers worse for the
markets, another “Lehman moment” followed by a contagion or the “first
episode of a pan-Europe uprising.” Somehow, I consider the latter the more
ominous because of its long-term implications. Caesaropapism? Now
that’s a term that might send us fleeing for the Google search window.
[smile] Though I think we get a sense of what he means without the effort.
“The pound plunged to its lowest level in more than three decades
immediately after the vote, and financial markets worldwide are likely to
remain in turmoil as the long, complicated process of political and economic
divorce from the EU is negotiated. The consequences for the real economy will
be comparable only to the financial crisis of 2007-2008. . .That is where we
are today. All of Europe, including Britain, would suffer from the loss of
the common market and the loss of common values that the EU was designed to
protect. Yet the EU truly has broken down and ceased to satisfy its citizens’
needs and aspirations. It is heading for a disorderly disintegration that
will leave Europe worse off than where it would have been had the EU not been
brought into existence.” – George Soros (Link)
MK comment: The overall instability likely wrought from the fiery furnace
Europe has become will have its most direct effect in bond ratings on the
various European countries, and possibly beyond. That in turn will create
margin calls and sell-offs to meet those calls. Needless to say, there
will be a good many trying to get ahead of the curve – a circumstance that
brings the future present. The central banks, as promised immediately after
the vote, will supply whatever cash is needed to stifle any emerging
financial panic starting today, but that will only further fuel the effects
of the sell-off and, to some extent, the flight to the safety found in assets
that are not someone else’s liability.
