US TRUMPED, HILARY DUMPED, PUNDITS STUMPED AND GOLD PUMPED
When playing a card game such as Whist or Bridge the TRUMP card is played as a surprise in order to gain an advantage says the dictionary ... and boy was it a surprise and did the pundits, the activists, the political sponsors ... pretty well everyone, all get it wrong. Whether or not there will be an advantage remains to be seen.
Putting aside personalities of the contenders for a moment, it was a great relief to see the established order over-turned and what just might (fingers crossed) be the beginning of another Ronald Reagan style presidency as far as an economic revival is concerned. If the debt crisis is to be solved (insofar as it can) - then we will need some unconventional thinking, leaders with a nationalist bias and yet an open economy ; in his acceptance speech the key take-away from Trump for us was the sense that the US would be open for business. So far, so good... and I am prepared to believe this view will not be universally held.
One of the best interpretations of events I think was the gold price action. An initial rally of 5% towards the 2011/2016 trend line before rapidly retracing today to leave the market relatively unchanged. If it was only gold that corrected lower then the sell-off might have been attributed to profit-taking by stale speculative longs ; however the correction was not endemic - it was across the board. The only conclusion to be drawn was that perhaps this political outsider - naive and outrageous though he is - might just have the right qualities. The jury is out and in the meantime gold remains one of the few sensible options punters have in hedging their positions.
Sharps Pixley Ltd
09 Nov 2016