Am I chastened by the gold crash? Yes. Have I changed my views? No.

Gold bounces back from "flash crash".

A few weeks ago I wrote in this blog words to the effect that I was surprised that gold had not reacted more positively to the Bank of Japan’s massive programme of Quantitative easing. As can be the case, failure on the part of the markets to react in the expected fashion to a piece of news, such as the BOJ’s QE, was THE most valuable of market indicators, giving the clearest possible indication of market positioning, and hence we saw gold’s "flash crash" on 15th April.

Am I chastened? Yes. Have I changed my medium-term view that gold is a must-have holding for any portfolio? No.

Since that day, when gold futures hit a low of $1361.10 per Troy ounce, gold has bounced back to $1470 as I write - a rise of 8 per cent and a pretty good "dead-cat" bounce.

Among the many theories propounded to explain the "flash crash" was that which suggested that investors took fright as, such was the size of the BOJ’s money-printing operation, the US Federal Reserve may feel the pressure had been taken off to perpetuate its own QE programme. Any such fears have subsequently been put to rest , first by a concerted barrage of dovish comment from the Federal Reserve’s ruling elite, and then by anaemic  1st quarter US GDP figures, which went to underline the need for continued monetary accommodation in the US.

It seems likely that the BOJ’s QE may have inspired locals to become bullish on the prospects for domestic investments, such as equities, leading them to liquidate holdings in other assets, such as gold, to bring money home.

Now the dust has settled, investors are once again focussing on the almost ubiquitous use of quantitative easing to combat economic stagnation and also the stealthy way in which central banks’ mandates have quietly been tweaked to focus less on inflation and more on employment.

I believe we will look back on the gold "flash crash" of April 15th 2013 and see it in the same light as the US stock market "flash crash" of May 6th 2010, which may well have shared some of the same causes, and which in retrospect represented a great buying opportunity.

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

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Richmond is a wake-up call for Labour's Brexit strategy

No one made Labour stand in Richmond Park. 

Oh, Labour Party. There was a way through.

No one made you stand in Richmond Park. You could have "struck a blow against the government", you could have shared the Lib Dem success. Instead, you lost both your dignity and your deposit. And to cap it all (Christian Wolmar, take a bow) you self-nominated for a Nobel Prize for Mansplaining.

It’s like the party strategist is locked in the bowels of HQ, endlessly looping in reverse Olivia Newton John’s "Making a Good Thing Better".

And no one can think that today marks the end of the party’s problems on Brexit.

But the thing is: there’s no need to Labour on. You can fix it.

Set the government some tests. Table some amendments: “The government shall negotiate having regard to…”

  • What would be good for our economy (boost investment, trade and jobs).
  • What would enhance fairness (help individuals and communities who have missed out over the last decades).
  • What would deliver sovereignty (magnify our democratic control over our destiny).
  • What would improve finances (what Brexit makes us better off, individually and collectively). 

And say that, if the government does not meet those tests, the Labour party will not support the Article 50 deal. You’ll take some pain today – but no matter, the general election is not for years. And if the tests are well crafted they will be easy to defend.

Then wait for the negotiations to conclude. If in 2019, Boris Johnson returns bearing cake for all, if the tests are achieved, Labour will, and rightly, support the government’s Brexit deal. There will be no second referendum. And MPs in Leave voting constituencies will bear no Brexit penalty at the polls.

But if he returns with thin gruel? If the economy has tanked, if inflation is rising and living standards have slumped, and the deficit has ballooned – what then? The only winners will be door manufacturers. Across the country they will be hard at work replacing those kicked down at constituency offices by voters demanding a fix. Labour will be joined in rejecting the deal from all across the floor: Labour will have shown the way.

Because the party reads the electorate today as wanting Brexit, it concludes it must deliver it. But, even for those who think a politician’s job is to channel the electorate, this thinking discloses an error in logic. The task is not to read the political dynamic of today. It is to position itself for the dynamic when it matters - at the next general election

And by setting some economic tests for a good Brexit, Labour can buy an option on that for free.

An earlier version of this argument appeared on Jolyon Maugham's blog Waiting For Tax.

Jolyon Maugham is a barrister who advised Ed Miliband on tax policy. He blogs at Waiting for Tax, and writes for the NS on tax and legal issues.