They’ve only gone and done it…

  • Out — and stay out
  • Whatever the question, the answer is always gold
  • If only we owned more of it
  • Pleasure in misfortune
  • Forget Brexit, get ready for ‘tiny stocks’
  • In the mailbag

Despite the opinion polls, and despite the exit polls, Britain has voted to leave the European Union.

I’ll admit to being surprised.

My assumption was that the lily-livered Brits would vote to stay in the European Union.

But they didn’t. 52% of British voters voted to leave. 48% voted to remain.

The impact on the markets? We’ll tell you now…


Before the release of the UK referendum results, overnight, the Dow Jones Industrial Average gained 230.24 points, or 1.29%.

The S&P 500 index added 27.87 points, or 1.34%.

In Europe, the Euro Stoxx 50 index closed up 59.55 points, or 2%. Meanwhile, the FTSE 100 index gained 1.23%, and Germany’s DAX index added 1.85%.

However, things are different in Asian markets. At the time of writing, the Nikkei 225 index is down 1,345.42 points, or 8.29%. China’s CSI 300 index is down 1.99%.

In Australia, the S&P/ASX 200 index is down 180.88 points, or 3.43%.

On the commodities markets, West Texas Intermediate crude oil is trading for US$46.94 per barrel. Brent crude is US$47.76 per barrel.

But forget that. The big news is gold. It’s trading for US$1,339 per ounce, up 6.17%. In Aussie dollar terms, it’s trading for AU$1,818. That’s the highest level since the peak in 2011.

Silver is trading for US$17.79 per ounce, and, in Aussie dollars, for AU$24.27 per ounce.

The Aussie dollar is worth 73.3 US cents.

Out — and stay out

That’s what’s happening now, but the biggest fun will be when European markets open at 5:00pm this evening, Australian Eastern Standard Time.

Based on the current futures market prices, the FTSE 100 index is set to open down around 10%.

When the US market opens around 11:30pm tonight, the Dow Jones Industrial Average and S&P 500 could fall around 5%.

In short, the markets were caught completely wrong-footed by the vote.

The only issue now is: What does it all mean?

Well, despite the tears from the ‘Remain’ camp, and despite the market volatility, it’s likely that not much will change.

If the UK FTSE 100 index falls 10% this evening, it will put the index around 5600 points. That’s a big fall. There’s no doubt about that.

But it’s also where the market was in February, before the index put in a strong rally. It’s also where the FTSE 100 was in 2012.

Bad news for stock investors? Yes. A disaster for stock investors? No.

What about the US market? If the futures market is right, you’re looking at a 5%-plus slump tonight. That would wipe about 700 points or so of the Dow Jones Industrial Average.

Big deal? Sure. But, like the UK, that would just put the index back to where it was in March this year. And it would still leave the index nearly 2000 points above the February low.

In short, despite the fear-mongering about a Brexit being a disaster for the British economy and the world, it’s nothing of the sort.

It’s only a disaster for the statists and the ‘Eurocrats’ who feed off the taxpayer. For them, Brexit is a big deal.

It puts their jobs in jeopardy. The thousands of bureaucrats in Brussels, who set the rules and laws to govern half a billion Europeans, will no doubt start to feel a little less secure in their jobs.

It will have a knock-on effect to other parts of Europe. As Bloomberg reports:

“Hurrah for the British!” tweeted Geert Wilders, the anti-EU, populist leader of the Dutch Freedom Party that leads in opinion polls ahead of elections in the Netherlands next spring. “Now it is our turn.”

The Eurocrats thought they could centralise power. They thought they could succeed where the fascists and communists of Europe’s past had failed.

Oh joy! They were wrong. Centralised power…despotic power…abuse of power never lasts. It always fails. It doesn’t always fail quickly, but eventually it does.

Make no mistake; we’re not saying that Britain will somehow now be some kind of libertarian, free market Utopia. Oh no, far from it.

It’s still a nation of backward looking, war-mongering, socialised healthcare sops.

Better that — retaining at least some control over their destiny — than continuing to live under the control of despotic Brussels-based despots.

Good luck to the Brits (your editor’s fellow countrymen). As the old saying goes, ‘Better out, than in’.

Whatever the question, the answer is always gold

Yesterday we wrote:

Electronic gold is a nice idea, but physical gold is an even better idea. Our tip for Britons would be to skip the Bureaux de Change, and instead head straight for their local bullion dealer.

It was good advice. We hope the Brits followed it. You can see the move in the gold price in pounds in the chart below:

chart image

Source: Bloomberg
Click to enlarge

As I write, the price of gold in pounds is up 14.9%.

The alternative, which is what many in the UK seem to have done, was to buy US dollars and euros. Nice idea, but it has underperformed gold.

The US dollar is only up 9.3% against the pound, and the euro is only up around 6% against the pound.

Selling pounds made sense. But buying gold with those pounds made even more sense.

As we say, time and time again (until we’re blue in the face): Gold is money…and it always will be.

If only we owned more of it

Whenever we see the gold price move, the only thing we can ever think of is that we wished we owned more of it.

Gold is up across the board, not just in pound sterling terms.

Right now, the Aussie dollar gold price is AU$1,793 per ounce. That’s up a staggering AU$143 on yesterday’s price.

We’re scanning through the price history of Aussie dollar gold going back as far as we can. We can’t see a time when it has ever risen that much in a single day:

chart image

Source: Bloomberg
Click to enlarge

Maybe our loyal gold bug readers can advise otherwise.

But as someone who advocates a real exposure to gold (30–40% of your overall portfolio), you can probably guess that we’re cock-a-hoop about today’s gold price action.

Pleasure in misfortune

Your editor will admit to being rather keen on the concept of schadenfreude. That is, taking pleasure in others’ misfortunes.

So we’re looking forward to reading the melancholic editorials from the lead writers at the Financial Times and The Economist, who were adamant that Britain had to stay in Europe.

The question now is whether they’ll keep up their disaster scenario, or whether they’ll change their tune.

Forget Brexit, get ready for ‘tiny stocks’

At the close, the S&P/ASX 200 was down 167.48 points, or 3.17%.

Meanwhile, you’ll hardly believe this, but guess what some of the market’s ‘tiny stocks’ were up to?

I’ll relieve you of the suspense. Check this out:

chart image

Source: Bloomberg
Click to enlarge

This is why I love ‘tiny stocks’. I hope you love them too. If you enjoyed our special ‘tiny stock’ video series this week, make sure to check your email inbox tomorrow afternoon.

If you didn’t get to see our ‘tiny stock’ series this week, I’m afraid you may not get a chance to join in the fun until this time next year.

But we’ll see. I’ll keep you posted.

In the mailbag

Subscriber John P writes:

Kris, you have crossed the line this time with yesterdays Port Phillip Insider and I can not let this one pass (unlike your earlier pieces of bad editing).

I refer to your continued dabbling with climate change. You clearly know nothing about it (self professed previously). Not knowing something is part of life, blatantly publish material which is wrong is ignorance at best, possibly much worse and appallingly bad editing for certain. Your reader Graham has obviously been reading the same pseudo-science claptrap that you read – the internet is awash with it and it looks convincing, until you identify where it comes from – and in almost all cases this will be from publications directly published or funded by the fossil fuel industry, or their kin. Do yourself a favour, get someone to translate some of the peer reviewed real science reports on climate change for you (I suspect Science was not one of your strengths at school) and you will find that:

  • the climate science community is in no doubt about the data
  • the data says that the planet is warming
  • we are causing it through continued increases in CO2 emissions
  • unless we change, we are stuffed – i.e. major changes to life as we know it

The real problem is not the science, its clear. But publishing blatantly incorrect hogwash is a big problem. This is a classic example of why the public is confused, and make no mistake, that, is the very clear intention of the ‘free market’ you hold so much faith in. Your ‘free market’ fossil fuelers have a vested interest in making sure our elected governments do not introduce legislation which will reduce their profits. The fossil fuel industry is following a well known strategy of highly funded, targeted public disinformation and you (being one of those targets) have proliferated that strategy, either intentionally, or in ignorance. Either way, you have no place there, nor does you publication. But out.

My recommendation is to keep your nose out of stuff you don’t know about, and instead focus on the things that I (your client) want to know about, such is determining market direction for influences like the impact of legislative changes on the fossil fuel industry (for the planets sake, I hope so), or information relating to the insurance industry which will no doubt need to do some major reassessments in coming times … or, if by some miracle sense prevails, leading insights into likely opportunities in alternatives. And from today’s publication that clearly doesn’t include Tesla!

I hope you read this and challenge you to respond to it.

I accept the challenge, and I’ll respond to it this way: As long as the global elites continue to perpetuate the fraud of supposed climate change, I’ll continue to speak out against it.

‘Recency bias’ is a very strong emotion. People tend to believe that events happening today are the biggest and most important events that have ever happened.

The reality is that a person’s lifetime of 70 years or so is insignificant in the broader context of the world’s history.

The climate may be changing. Temperatures may be rising. Temperatures may also be falling.

But to suggest that these events are solely the direct, or indirect, action of humans is nonsense.

The statists would love you to believe that it’s your fault…and that to tax you will provide the solution to the fraudulent notion of climate change.

The reality is that it won’t. Governments can’t solve anything through taxes or policies. If climate change is a genuine threat, the only possible solution is for a free market solution.

That’s an answer that won’t please subscriber Keith. He writes:

I recommend that you drop the incursions into the climate debate…..they add a big fat zero to your credibility. I’m about as interested in your take (beliefs) on the climate debate as your take on religious matters (beliefs).  Oh, and by the way, your mate Warren is clearly a cut & paste prize dill. On everything else you are seriously worth listening to.

Respectfully, a long term PPP subscriber.

Ah well.