Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
Gerald Celente: Why You Still Need Guns, Gold, and a Getaway Plan... - 23rd Jun 18
Cheap Gold Stocks Bottom Basing - 23rd Jun 18
A Trade War Won’t Be Good for the US Dollar - 23rd Jun 18
SPX/Gold, Long-term Yields & Yield Curve 3 Amigos Update - 22nd Jun 18
Gold - How Long Can This Last? - 22nd Jun 18
Dow Has Fallen 8 days in a Row. Medium-long Term Bullish for Stocks - 22nd Jun 18
Trouble Spotting Market Trends? This Can Help - 22nd Jun 18
Financial Markets Analysis and Trend Forecasts 2018 - A Message from Nadeem Walayat - 21st Jun 18
SPX Bouncing Above Support - 21st Jun 18
Things You Need To Know If You Want To Invest In Bitcoin Now - 21st Jun 18
The NASDAQ’s Outperformance vs. the Dow is Very Bullish - 21st Jun 18
Warning All Investors: Global Stock Market Are Shifting Away From US Price Correlation - 20th Jun 18
Gold GLD ETF Update… Breakdown ? - 20th Jun 18
Short-term Turnaround in Bitcoin Might Not Be What You Think - 19th Jun 18
Stock Market’s Short Term Downside Will be Limited - 19th Jun 18
Natural Gas Setup for 32% Move in UGAZ Fund - 19th Jun 18
Magnus Collective To Empower Automation And Artificial Intelligence - 19th Jun 18
Trump A Bull in a China Shop - 19th Jun 18
Minor Car Accident! What Happens After You Report Your Accident to Your Insurer - 19th Jun 18
US Majors Flush Out A Major Pivot Low and What’s Next - 18th Jun 18
Cocoa Commodities Trading Analysis - 18th Jun 18
Stock Market Consolidating in an Uptrend - 18th Jun 18
Russell Has Gone Up 7 Weeks in a Row. EXTREMELY Bullish for Stocks - 18th Jun 18
What Happens Next to Stocks when Tech Massively Outperforms Utilities and Consumer Staples - 18th Jun 18
The Trillion Dollar Market You’ve Never Heard Of - 18th Jun 18
The Corruption of Capitalism - 17th Jun 18
North Korea, Trade Wars, Precious Metals and Bitcoin - 17th Jun 18
Climate Change and Fish Stocks – Burning Oxygen! - 17th Jun 18
A $1,180 Ticket to NEW Trading Opportunities, FREE! - 16th Jun 18
Gold Bullish on Fed Interest Rate Hike - 16th Jun 18
Respite for Bitcoin Traders Might Be Deceptive - 16th Jun 18
The Euro Crashed Yesterday. Bearish for Euro and Bullish for USD - 15th Jun 18
Inflation Trade, in Progress Since Gold Kicked it Off - 15th Jun 18
Can Saudi Arabia Prevent The Next Oil Shock? - 15th Jun 18
The Biggest Online Gambling Companies - 15th Jun 18
Powell's Excess Reserve Change and Gold - 15th Jun 18
Is This a Big Sign of a Big Stock Market Turn? - 15th Jun 18
Will Italy Sink the EU and Boost Gold? - 15th Jun 18
Bumper Crash! Land Rover Discovery Sport vs Audi - 15th Jun 18
Stock Market Topping Pattern or Just Pause Before Going Higher? - 14th Jun 18
Is the ECB Ending QE a Good Thing? Markets Think So - 14th Jun 18
Yield Curve Continues to Flatten. A Bullish Sign for the Stock Market - 14th Jun 18
How Online Gambling has Impacted the Economy - 14th Jun 18
Crude Oil Price Targeting $58 ppb Before Finding Support - 14th Jun 18
Stock Market Near Another Top? - 14th Jun 18
Thorpe Park REAL Walking Dead Living Nightmare Zombie Car Park Ride Experience! - 14th Jun 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Britain EU Exit ‘BREXIT’ Poses Risks To London Property, FTSE and Sterling Asset

Stock-Markets / UK Stock Market Mar 10, 2015 - 06:03 PM GMT

By: GoldCore

Stock-Markets

  • Political uncertainty beginning to impact bond and property markets
  • UK bonds and stocks at all time record highs and ‘bubbly’
  • FTSE looks overvalued and ripe for sharp correction
  • “Air of caution in the run-up to the general election” hits London property
  • City of London has most to lose from Brexit
  • Brexit may isolate UK – “North Korea option” – or lead to strong, independent UK, like Hong Kong
  • Real diversification remains only “free lunch”

With all the focus on Grexit in recent weeks, investors have not paid much attention to the risk posed by ‘Brexit’ or the possibility of the UK leaving the European Union.

This is the case in currency and stock markets with the FTSE and sterling remaining buoyant despite obvious risks. Indeed, gilts remain close to all time record highs – in part due to QE.

The FTSE 100’s successive new record highs in recent weeks despite the deteriorating global economic backdrop has echoes of previous bubbles. We all know how those ended – see chart below.

FTSE 100 Index – 1985 to March, 2015 – (Thomson Reuters)

That may be beginning to change as U.K. two-year government bonds posted the longest run of weekly declines in eight months today. Ten year gilt yields reached the highest level in almost three months last Friday.

The fall in gilt prices is being attributed to concerns about rising interest rates. It is likely that some of the weakness could be related to election and ‘Brexit’ risk.

Political risk has already been cited as a reason for a slowdown in the London housing market with RICS UK citing a number of “challenges” facing the London housing market including “an air of caution in the run-up to the general election”.

Cameron has promised that a referendum will be held before 2017 if he is re-elected. Pre-election jitters are showing in option prices ahead of May’s poll. This week the maturity of the three-month rolling sterling-dollar option passed the election date, and implied volatility jumped sharply according to the FT:

Equity options are priced for a move in the FTSE 100 the day after the vote, up or down, of close to 4 per cent, up from 1.5 per cent at the start of the year, according to Kokou Agbo-Bloua at Société Générale.

Derivative traders anticipate more volatility than usual because the outcome of the election is more uncertain than usual. No party is likely to have a majority, and a coalition will probably be harder to put together than in 2010, when politicians were under intense pressure amid a weak economy and jumpy markets. Psephologists expect a minority government, risking another election not too long afterwards and adding to policy uncertainty.”

In a sign investors are expecting a close-run election, a gauge of the volatility of the sterling over the next six months rose to a two and a half year high in February.

SocGen analysts said in a report last week that an exit from the EU might trigger a 20% decline in the FTSE 100 by the end of 2017.

A report from the Open Europe Study suggests that Europe would be less inclined to negotiate favourable agreements pertaining to the financial services sector in Britain because it runs a large trade surplus with the EU.

Financial services sectors in the EU would therefore have little incentive to grant advantageous terms to their British rivals. The report also refers to the European Parliament’s alleged hostility to the UK’s financial sector as a possible   motivation to restrict Britain’s access to the single market.

“Post-Brexit the centre of gravity within the EU may shift towards a tougher regulatory regime for accessing the single market. The European parliament’s hostility to Anglo-Saxon finance could prove a major stumbling block.”

The Financial Times ran an interesting piece yesterday attempting to dissect the implications of a “Brexit” as presented by both sides of the debate.

The FT concluded that it is impossible to agree with either side’s analysis as both sides assume the outcome of negotiations that have not taken place.

We would add that they ignore the instability that the very act of Britain voting to leave the EU would create, and the impact such instability would have on negotiations. This is especially the case given the very fragile state of the European Union at this time – economically and indeed politically.

Gold in Sterling – 10 Years

Advocates of a “Brexit” envisage a Britain like Hong Kong, strong but independent of Europe’s burdensome regulation and directives and somewhat imperial super state ambitions.

Those opposed to it, like Gordon Brown, have suggested it would leave Britain isolated. Brown went so far as to alarmistly describe it as the “North Korea option”. Open Europe do not regard either outcome as credible.

The uncertainty surrounding a possible “Brexit” will likely take a toll on sterling itself and sterling denominated assets such as property, equities and gilts.

Political risk now clouds the outlook for the UK and sterling assets. Investors and markets do not like uncertainty. UK investors seeking to hedge these political risks should consider an allocation to safe haven gold.

In life and in finance, there are very few “free lunches.” However, investors today continue to be able to avail of the only free lunch in finance and investing which is diversification.Having all your eggs in sterling or any other currency basket is imprudent and diversification remains key in order to protect and preserve wealth in the uncertain times of today.

Updates and Award Winning Research Here
MARKET UPDATE

Today’s AM fix was USD 1,161.00, EUR 1,079.40 and GBP 770.41 per ounce.
Yesterday’s AM fix was USD 1,173.75, EUR 1,077.97 and GBP 776.86 per ounce.

Gold in Sterling - 1 Day

Gold in Sterling – 1 Day

Gold rose 0.1% percent or $1.20 and closed at $1,166.90 an ounce yesterday, while silver slipped 0.5% or $0.08 to $15.79 an ounce.

Gold hit a three month low in Asian trading as a strong U.S. dollar and expectations of a June U.S. interest rate hike keep gold under pressure.

Technical analysts are predicting the next support level for gold at $1,150 per ounce.

Tomorrow the Greek saga may take centre stage again as delegates from the European Commission, IMF, ECB – known as the Troika, and Greece will meet to discuss economic reforms.

Dutch finance minister & ESM president, Jeroen Dijsselbloem, said, “Greece won’t get any more cash from its 240 billion-euro ($258 billion) rescue program until its official creditors are satisfied that Tsipras is committed to all the economic fixes needed to meet its conditions.”

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, saw the bearish trend continue as holdings fell 0.43 percent to 753.04 tonnes on Monday, their lowest in more than a month.

Gold near end of day trading in Singapore was $1,161.65 per ounce. In late morning trading in London, spot gold was $1,162.08 down 0.38 percent. Silver was $15.73 or unchanged, while platinum was $1,137.40 off 0.72 percent.

Gold’s weakness in recent days is very much a function of dollar strength versus the euro and importantly gold has remained firm in euros.

HOW TO STORE GOLD BULLION – 7 KEY MUST HAVES

This update can be found on the GoldCore blog here.

Mark O'Byrne

Director

IRL
63
FITZWILLIAM SQUARE
DUBLIN 2

E info@goldcore.com

UK
NO. 1 CORNHILL
LONDON 2
EC3V 3ND

IRL +353 (0)1 632 5010
UK +44 (0)203 086 9200
US +1 (302)635 1160

W www.goldcore.com

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

GoldCore is committed to complying with the requirements of the Data Protection Act. This means that in the provision of our services, appropriate personal information is processed and kept securely. It also means that we will never sell your details to a third party. The information you provide will remain confidential and may be used for the provision of related services. Such information may be disclosed in confidence to agents or service providers, regulatory bodies and group companies. You have the right to ask for a copy of certain information held by us in our records in return for payment of a small fee. You also have the right to require us to correct any inaccuracies in your information. The details you are being asked to supply may be used to provide you with information about other products and services either from GoldCore or other group companies or to provide services which any member of the group has arranged for you with a third party. If you do not wish to receive such contact, please write to the Marketing Manager GoldCore, 63 Fitzwilliam Square, Dublin 2 marking the envelope 'data protection'

GoldCore Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules