Markets hate uncertainty, as the famous cliché has it.
Gold doesn’t though - gold loves uncertainty, or at least gold bulls do.
And there’s quite a bit of it about at the moment.
There’s the uncertainty around the Fed’s desire to raise rates - stymied recently by poor numbers in the US labour market.
There’s the uncertainty around the Chinese economy, and how much further growth rates will fall.
And there’s Brexit.
Brexit may not be the biggest issue facing the global economy at this time, but the uncertainty around it is huge and hysteria in the UK at least has been rising by the day.
Sterling has been volatile to say the least, plumbing new lows against the dollar and rebounding sharply.
The DAX and the CAC have been heavily sold off.
And the gold price has risen.
Not only has gold been rising against the dollar - modestly but steadily. It’s also been rising against sterling, and much more rapidly.
Indeed, as commentary from bullion broker Sharps Pixley shows, the combination of stronger gold against the dollar and a weaker pound against the dollar has led to some significant gains for anyone who’s bought gold with sterling this year.
Since the beginning of January the gold price has risen by more than 25% in sterling terms, a return that must be the envy of professional investors the world over.
But it may only be short-term. Bookmakers now put the possibility of a British exit from Europe at 42%, up from 20% in late May, according to commentary put out by the German bank Berenberg.
That still leaves a 60% likelihood that Britain will stay in, and if that is the outcome then recovery rallies in equities and currencies may be short, sharp and sweet. Gold will likely soften in sterling terms, although not necessarily so markedly in dollar terms.
And so the world turns.
Still, it is notable that more and more serious commentary is now focussing on the possibility of a British exit and what it might mean for global markets, including commodities.
Capital Economics says that a Brexit vote would “presumably have a negative impact on global business and investor confidence and hence undermine the prices of industrial commodities.”
But note the key caveat there – “presumably.”
It’s actually almost impossible to construct realistic models for what will happen in the event of Brexit.
Would Greece follow? Would the Scandinavian countries be tempted? Will the old north-south division in Europe open up again?
What if hundreds of thousands of Syrians start pressing in across borders that are supposedly no longer there? And what if the Germans continue to foist immigration on other European countries?
Austria very nearly elected a fascist as president last month.
No wonder Capital Economics argues that a Brexit vote would boost demand for safe havens. And it adds that the gold price “could easily” jump to US$1,400 per ounce.
More caveats there too.
But after the caveats the Capital Economics analysis does get interesting.
“Our view is that a quick rebound in payrolls in June (data due in early July) and a decisive UK vote to remain in the EU could yet persuade the Fed to raise rates in late July.”
Even though Capital then qualifies this statement by saying that a delay until the September meeting of the Federal Open Markets Committee is more likely, it does show the direction of travel economists are taking.
Whether they are right to be so blasé remains to be seen.
The latest polls show a slight majority in favour of Brexit, and there is also widespread disillusion about the manner in which the campaign has been conducted.
As broker SP Angel wrote in commentary earlier in the week after the influential Sun newspaper backed Brexit, “British voters might not particularly trust their own politicians but they are likely to trust the faceless and unaccountable bureaucrats in Brussels a whole lot less.”
SP Angel then added that voting for Brexit would not mark “a sudden exit”, a point also made by Capital Economics.
In fact the exit process could take years, and indeed there’s no absolute guarantee that even in the event of an exit vote the British would leave Europe.
Why? – because parliament is sovereign, not the British people, so legally speaking the referendum will have no validity whatsoever.
Uncertainty? - you want it, you got it.