First, my apologies for not following up on Friday with another update. As you know, Friday was a chaotic trading day, and unfortunately I was also under the weather at the same time, but no excuses.
On Friday, you should have bagged gains of 212.9% on your July 2016 CurrencyShares British Pound Sterling ETF (FXB) put options, which is not bad for a one-day hold.
Obviously, the British pound was the hardest hit currency following the Brexit vote. But it’s not the only currency suffering losses in the aftermath.
The euro was also slammed to the mat, and is falling another 1% this morning. Why? Because Brexit is just the tip of the iceberg. Now the dominoes are really going to start tumbling all across Europe.
France is already talking about a FREXIT, just the day after Britain’s referendum. Italy is talking about leaving, as is Spain, and you know it was clear from my studies of history that the EU was not going to work, it was an artificial union all along.
Now the EU experiment is over: RIP!
You should now be sitting on open gains for your August 2016 EUO call options while your January 2017 EUO calls are still underwater, but there is plenty of downside left in the euro, and over six months remaining for these options. So continue to hold both positions for now.
The flight to safe-haven assets nicked our inverse bond ETF, the Direxion Daily 20 plus Year Treasury Bear 3x Shares (TMV), which fell on Friday as Treasuries rose. Unfortunately, we were stopped out this morning. Stand aside for now, but I’ll be looking to re-enter this trade once volatility subsides.
It’s going to take some time for the dust to settle and to assess the market implications; just too much random noise right now. It’s possible that Brexit will send gold into a cycle inversion, meaning we’re getting a high on this upcoming cycle turn date, rather than a low.
Gold closed well off its morning high on Friday afternoon and it is up only about 0.5% today. Gold still has not closed above key long-term resistance above $1,368 on a monthly closing basis. I will be watching the June closing for gold very closely on Thursday afternoon, and so should you, because it should hold the key to whether we get more upside in gold short-term, or a downside reversal and the correction I have been expecting.
So for now, hold your gold positions until we get a clear signal on the next move in the yellow metal.
Best wishes,
Larry
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