By Bill Holter
BREXIT! I have to admit, I did not believe it would happen. Rather, I did not believe it would be "allowed" to happen. In retrospect I believe the elites will look back and wish they had "Diebold" doing the vote count. This vote has so many various ramifications, it is hard to wrap your head around what it means but let's take a look at what stands out most.
First and foremost, the "people stood up and spoke". The vote to exit is without a doubt the largest protest vote the world has seen in many years. It is important to note that the Brexit vote is symptomatic of what is happening worldwide. I would also say it is very similar to the Trump phenomenon here in the States, people are angry. (I would also say the results are very encouraging to the Trump camp). Next, we must wonder "who" is next? Italy, Spain, France? Then, the next exit is the curtain for the EU experiment as a whole. It is only a matter of time before the next referendum (Italy in October), Brexit is only the beginning of an end where individual countries will prefer to steer their own destinies. "Globalization" has been dealt a huge blow!
It should be noted, the vote yesterday was only a referendum and does not guarantee the Parliament will petition to leave the Eurozone. It will be interesting to see how the Brits react if Parliament defies their wishes. All of this will take "time" to occur, but time is not something I believe is available and will most likely be cut short by the markets short circuiting.
As for markets, Brexit is being called a six sigma "Black Swan". I had planned to write today that the entire system itself is the fabled Black Swan, I think we will soon see if this thought is correct. The world will wake up Monday morning to all sorts of margin calls. You must understand, the "carry trade" is held on very thin margin. No matter what market you are looking at, they all moved several percentage points versus 1% or much less used to carry positions. My point is this, many "counterparties" were outright blown up today and are dead entities unable to perform. Yes I am sure the Fed, ECB and BOJ will provide liquidity but that will not erase the losses, it will only postpone the pronouncement of death.
I believe it is VERY important to look at the "direction" that all markets have taken since the Brexit news. THIS is the direction of Mother Nature versus the direction of the elite controllers. You can call the moves "out of control" if you wish, the important thing to understand is the control of markets was temporarily lost and went in "bad" directions. These "bad" directions are your road map as to which direction various assets will move in the upcoming re set. I say the above with one caveat, capital flowed into U.S. Treasuries and German bunds, a reset will not be kind to the owners of debt from any issuer.
To finish, clearly today's unanimous winner in ALL currencies was gold. As I wrote above, I believe the action today is your road map and a "tell" as to where we are headed. Financially, the system blew up behind the scenes and we will soon hear "who, where and how much". We have gone nearly eight years with "unlimited paper" pushing, pulling and "pricing" markets in directions that supported the Alice in Wonderland world. The knee jerk reactions you saw today will only become more violent as today was only for starters. The only question remains, how long can they keep markets open? The carry trade unwind can only go so far without control being totally lost. Central banks will be mere straws in a hurricane of fear. A complete re set of "pricing" is not far off!
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Bill Holter for;
Bill Holter writes and is partnered with Jim Sinclair at the newly formed Holter/Sinclair collaboration.
Prior, he wrote for Miles Franklin from 2012-15. Bill worked as a retail stockbroker for 23 years, including 12 as a branch manager at A.G. Edwards. He left Wall Street in late 2006 to avoid potential liabilities related to management of paper assets. In retirement he and his family moved to Costa Rica where he lived until 2011 when he moved back to the United States. Bill was a well-known contributor to the Gold Anti-Trust Action Committee (GATA) commentaries from 2007-present.