Will UK leave the EU?

I’m sure the majority, if not all of you are aware of the upcoming referendum in the UK in less than a week time to decide whether UK will stay or leave the EU union. No one knows for sure what will be the result of course but the polls have been increasingly in favor of exiting the EU with a double-digit-point lead over Brits who want to stay. There is no precedent on it and the potential damage done to the EU is deemed huge. One possible outcome of the Brexit is the end of the EU as other member countries may want to follow the same route to leave the EU. Inevitably this saga has created a lot of uncertainty leading to high volatility. In generally, the stock markets will go down, the US$ will go up along with gold and silver as well as government bonds. We likely will see this trend intensified as we go closer and closer to the due date, June 23. But somehow my gut feeling tells me Brexit won’t happen and the UK will remain in the EU. We are probably seeing another drama similar to what was happening to Greece about a year ago when the fate of Greece in the Eurozone was to be decided. I had the same feeling at that time that I just didn’t believe it would occur as I wrote in my blog. This time, apart from my gut feeling, there are two additional things going on that kind of in favor of my bet: For one, the large corporations in the UK are urging their UK employees to vote to stay. Don’t underestimate this as this involves quite a large portion of the voters in the UK and their efforts may also move the needle. The other thing is more interesting. While the polls are largely in favor of the Brexit, the real money is betting strongly that Britain will stay in the EU. You can see this via the odds at Ladbrokes. Ladbrokes is a UK-based world leader in online betting and gaming. You can virtually bet for any significant issues around the world. Don’t forget, this is the real money from people who are serious about their betting and oftentimes they are right, especially when it is getting closer to the day of the incident. If you ask me, my money is on the real money, not the polls.

So be aware of the possible consequences if you are long gold/silver, US$ and bonds and short stocks. We may see a large reversal if indeed the UK referendum decides that UK will stay in the EU. Be prepared for a sharp decline of gold, dollars and bonds, and jump of stocks. In a way, this is likely what will happen post the vote even if the Brexit wins, a kind of relief reversal that people buy/sell the news and sell/buy the result.