People have been reading way too much into gold prices

Backlash against the doom-mongers.

The plummet in gold prices has been a big story over the last day or so, and today's dead cat bounce in the market has been accompanied by an equally inevitable backlash from economists and commenters. Apparently the doom-mongers have been reading far too much into the drop in prices, and it's time for a reality check. Here, for example, is Monument Securities' Stephen Lewis (my emphasis):

When a price slides as that of gold has in recent days it pays not to draw too firm a conclusion regarding the fundamental significance of the movement.  When the fundamentals change as, for example, when economic growth picks up or inflation subsides, the process is usually gradual.  To be sure, investors may not notice what is happening until a signal event reveals the truth, but more often than not the market response to changes in fundamental economic conditions is also gradual rather than precipitous.  There has been no striking event or statement in the past few days such as might give convincing grounds for investors to abandon gold in favour of growth-correlated assets.  Consequently, attempts to spin the gold price collapse as an indication that investors are piling in behind the view that prospects for global growth and for the US dollar have brightened are lacking in credibility.  More likely, gold's slide reflects factors internal to that market, amplified perhaps in the conditions of heightened market liquidity, and volatility, that central bank asset purchases have created.

And here's Lars Christensen with the same point in graph form:

The big story in the financial markets this week is the continued decline in commodity prices – particularly the drop in gold prices is getting a lot of attention.

The drop in commodity prices have led some people to speculate that this is an indication that the global economy is slowing. That may or may not be the case. However, as Scott Sumner like to remind us – we should never reason from a price change. 

We have to remember that the price of commodities can drop for two reasons – either demand for commodities declined (that would be an indication that the global economy is slowing) or because of a positive supply shock (that on the other hand would be good news for the global economy).

The good news graph…

And the bad news graph…

 

This is not the place to speculate about whether we are in the “bad news” or the “good news”, but global markets are nonetheless telling us that this is not the time to panic – global stock prices have been trending upward, while commodity prices have been declining.

The point, says the Guardian's Nils Prately, is that gold moves to its own tune, and it's tune is at a very slow rhythm:

should we really be surprised that a 10-year bull market could be over? Gold has always run on long cycles, but a decade is still a very long time.

 
Photograph: Getty Images
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Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.