Q: We have witnessed enormous volatility in the gold market with BREXIT’s unexpected win. Does this mark the beginning of a breakout to the upside or was it a panic finish of a countertrend rally starting at about $1,050 and ending at about $1,360?
A: Good question. The last $110 move in two hours was certainly a panic. It dropped back $55 in a shorter period. Now you know what a panic looks like. The reaction to the vote is a confirmation that we are in a bull market. The low was the $1050. We have started a three to five year bull market in gold. There is still lots of upside to go.
Q: We never got the wave pattern and specialist short covering, or did we?
A: Yes and no. We did not have a bottom where all of the market segments made their low together. We had what Nathan Wheeler referred to as a rolling depression associated with a winter cycle. A summer cycle would have been a V depression, as in the 1930s, where everything falls apart at once. In any case, the reaction to BREXIT confirms that we are in a primary bull market.
Q: Now the question is how to enter the market. Should we wait for a pullback or enter now? And if now, how?
A: I will be providing that information to paying clients shortly. It may be that the panic also marked the end of an interim up move. We will know shortly.
Q: There was enormous passion on both sides of the BREXIT debate. Ms. Joe Cox, a British MP, was assassinated shortly before the vote. She was a strong advocate for remain. The polls a week earlier had BREXIT winning 55 to 45. The final number was 52 to 48. It looks like whoever was behind the assassination wanted to increase votes for remain. Could you comment?
A: Yes, it appears that way on the surface. But, high profile political assassinations in the British Empire are rarely so simple.
Q: What do you mean by the term British Empire?
A: The UK, which now includes Gibraltar; the overseas dependent territories, which include the Falkland Islands; the Commonwealth, which includes a population of over two billion; and, the banking and commercial companies associated thereto. I do not believe that the assassination could have happened without the approval of MI5 and MI6. Those are domestic and overseas military intelligence respectively.
Q: Are you saying this was an inside job?
A: I see signs of a family dispute.
Q: How so?
A: The EU Brussels bureaucracy provides lots of high paid positions for failed politicians from the EU. After you lose an election in, say, Luxembourg, you can become an EU minister at any one of a dozen commissions and related bureaucracies. The City of London bankers hold the ultimate power in the British Empire. The Queen is the head through which that power is communicated to the politicians and bureaucrats. MI5 and MI6 are the enforcers. In the event of a dispute between politicians and the Queen, the enforcers have made it clear that MI5 and MI6 will follow the Crown’s instructions.
Q: So why would the bankers want to assassinate an MP?
A: To remind the politicians and bureaucrats who is in control. As Stalin famously said, voting settles nothing; who counts the votes settles everything. Unlike the referendum in Scotland, this time, no irregularities were reported and the results were clear within hours. Everyone was well behaved. The next day, after meeting with the Queen, David Cameron announced his resignation. Earlier, he had indicated that losing the referendum would not be a reason to resign. There are deeper, more fundamental reasons for the bankers behaving as they did.
Q: What are the City of London bankers’ deeper reasons?
A: If the UK had stayed in the EU and accepted Brussels’ dictates on financial regulation, it would have meant the end of London as a serious international financial center. The Germans would be in control. One of the things the Germans have proposed is the elimination of short selling. That by itself would mean the end for London as a world banking center. European business would shift to Germany and international business to places like Singapore. Control over the profits of international trade would likewise shift. I recall that the British Empire defeated Germany in two world wars and so retained its control over those profits. Why would they give up that control now? What would be the point of having an Empire without the profits, and is that even a possibility?
Q: I see your logic. Why did the London banks tell their employees to vote remain?
A: Perhaps to get the same reaction that Obama got when he told the British they would have to go to the end of the queue for a trade deal with the USA if the UK were not part of the EU. In both cases, it helped BREXIT. Things are not always what they appear on the surface to be.
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