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Gold Price Under Pressure After Last News On Brexit

|Includes: Barrick Gold Corporation (ABX)

Soros emphasized that the depreciation of the pound in case of the Brexit and reminded what happened on the Black Wednesday of 16 Sept., 1992, when the Hungarian Billionaire made a profit of $1 billion shorting the pound:

"the value of the pound would decline precipitously. [It] would also have an immediate and dramatic impact on financial markets, investment, prices and jobs." […] "I would expect this devaluation to be bigger and more disruptive than the 15% devaluation that occurred in September 1992, when I was fortunate enough to make a substantial profit for my hedge fund investors, at the expense of the Bank of England and the British government." […] "British voters are now grossly underestimating the true costs of Brexit. Too many believe that a vote to leave the EU will have no effect on their personal financial position. This is wishful thinking."

During the first quarter of 2016 the Soros Fund Management took up a $263.7M stake in Barrick Gold Corporation (NYSE:USA) during the first quarter of 2016, showing a considerable investment in the gold industry.

The day of a steep decline in the price of gold was also characterized by the following news that increased the uncertainty surrounding the economy in the European Union and in the USA:

The European Central Bank is "ready to face all eventualities" if Britain votes to exit the EU Thursday, ECB President Mario Draghi said to the European Parliament. Cameron warns Brexit poses 'huge risk' to economy: the British economy will be weaker if the British will vote to leave the UE because Great Britain will face irreversible consequences.

"Those in favor of a withdrawal argue that outside the bloc, Britain would be better positioned to conduct its own trade negotiations, better able to control immigration, and get rid of excessive EU regulations and bureaucracy.

Those in favor of remaining in the bloc argue that leaving it would risk the UK's prosperity, diminish its influence over world affairs, and result in trade barriers between the UK and the EU."( here).

Federal Reserve Chair Janet Yellen is not taking sides ahead of Britain's June 23 vote on Brexit, but that the U.S. central bank is monitoring the situation carefully:

Should Britain decide to exit the EU, markets are likely to react in "a kind of risk-off sentiment ... that we might see flight to safety flows that could push up the dollar or other so-called safe-haven currencies." Yellen said.

Assuming the positive correlation between the S&P 500 and the Fed, if GB exits the EU, the Fed may be forced to put in place a QE, that in the UK, according to Soros, will do very little to stimulate the economy.

George Soros also argued a lot of financial speculations around the Brexit :

"Today, there are speculative forces in the markets much bigger and more powerful. And they will be eager to exploit any miscalculations by the British government or British voters. Brexit would make some people very rich - but most voters considerably poorer."

After the release of George Soros' note sent to The Guardian about the consequences of the possible Brexit, yesterday, June the 21st, gold fell by 1.1% from ~US$1,282.28 to ~US$1,268.32.

Following the news on Brexit the oil fell 1.13% and the trading day was closed at US$ 48.85 per barrel.


All this news together increases uncertainty about the future of the world economy and financial markets. This is the only thing that is certain to date plus fierce commodities short selling activities.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.