Shall The UK “Bremain”?
June 20, 2016
Dennis Gartman is editor and publisher of The Gartman Letter, and strategic advisor of the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN). He regularly contributes to AlphaBaskets and lends his institutional insight to educate advisors and investors about commodities and the forex markets, including about trading gold in different currency terms.
Sterling has exploded higher; the Yen, however, is weaker and the EUR is following Sterling’s explosive rally, all of which is predicated upon the news that following the tragic shooting late last week of Ms. Jo Cox…a Member of the British Parliament who was actively involved in the “Remain” campaign… those supporting the UK remaining within the Euro-zone have now taken the lead in the latest polls. On Friday in our commentary we said that If the referendum goes as scheduled, Ms. Cox’ death will serve to bring out the “Remain” votes to cast their votes in sympathy/solidarity with Ms. Cox while the “Leave” voters shall have a marked propensity now not to go to the polls to vote.
We stand by that statement and that is precisely what has happened, for the latest polls do indeed have the “Remains” leading the “Leaves” with a telephone poll by Survation taken on behalf of the newspaper Mail on Sunday having those wishing to stay in the Union leading 45-42. The same group, having polled the country last Thursday only hours before Ms. Cox’ death, had those wishing to “Leave” leading by the same 3 points. Hence this has been a rather dramatic swing.
The You/Gov poll released yesterday has the “Remains” leading the “Leaves” by 44-43 and it is important to note that the previous You/Gov poll from early last week had the “Leaves” leading by 7 points. Again, this is a material shift in sentiment. There will be more polls released late tonight that will be taken during the day today, so things may change yet again. The referendum is the 23rd and between then and now the rumors and the price movements can be… and probably shall be… quite material.
Regarding gold, perhaps the most important news for the gold market over the weekend other than the news out of Europe is the news out of India that the Governor of the Reserve Bank of India, Mr. Raghuram Rajan, has decided not to accept another term in office and will stand down at the end of his term in September. This is indeed a surprise…and certainly a disappointment… for characteristically the Governors of the Reserve Bank of India serve two or perhaps even three full terms. However, Mr. Rajan… who we have championed here may times and who we openly applauded when he was named to that post several years ago; indeed, in speeches we’ve given and in Q&A periods following those speeches we’ve often referred to Mr. Rajan as “A stud!”…has been taken to task by associates of Prime Minister Modi for having kept interest rates too high in India and has decided that he’s had quite enough of those political attacks upon his leadership of the RBI and has chosen to stand down.
We suspect that this decision shall warrant purchases of gold by investors/speculators et al in India who’ve been on the sidelines for the past several months. They’ve been on those sidelines because of India’s high interest
rates that have siphoned money away from the gold market but which now almost certainly shall return… a return that is long, long over-due.