“Gold macro story more compelling than ever,” trumpets UBS research from 5 July. “We think gold has entered a new phase.”
Switzerland isn’t in the European Union and is a frequent holder of referendums. As such the Swiss are in a better position than most to bring some educated objectivity to the likely impact of a British exit. Not for the Swiss the anguished distortions of disenfranchised London elites, nor the blithely blind assurance of the Leave camp in the face of tumbling credit ratings tumble, and nor indeed the wild Trumpist readings that have come from the other side of the Atlantic.
“The Brits have taken their country back,” argued John Bolton, the former US ambassador to the UN on American television last week.
Well, maybe. But it’s funny how such a statement actually fits more neatly into the US narrative than into the European.
There’s no such rhetoric from the Swiss side of the newly strengthening European fences - the Swiss are quietly comfortable outside of the European Union and on the whole - and in the most neutral way possible - happy to see another major player in the global financial system jointing their ranks.
Instead, the most interesting noises that have been issuing from Switzerland have been deadpan analyses in the manner of that from UBS above.
“The UK’s vote to leave the EU further underpins gold’s macro narrative, reinforcing the themes of further dovish shifts in monetary policies, consequently lower yields, and heightened uncertainty,” adds UBS.
“We continue to expect US real rates to fall from here and ultimately for equilibrium real rates to settle lower and have limited upside. These factors justify strategic gold allocations across different types of investors and we expect this trend to continue.”
Meanwhile, over at Credit Suisse they’re starting to move on from Brexit, at least in terms of assessing the outlook for the metals and mining sector.
Gold still gets the headline billing following the Brexit result, but Credit Suisse almost seems embarrassed as to how straightforward a call that is.
“In our view, gold is the easy-to-see winner in the near term given last week's Brexit vote which has clearly heightened political and economic uncertainty,” said Credit Suisse analysts in a note released on 6 July.
More interesting are the calls on iron ore, coal and zinc.
Iron ore is a market which is likely to remain depressed according to the Credit Suisse number crunchers, but which could be at least “relatively balanced” in 2016 and early 2017, allowing for some short-term easing of the pressure. Be that as it may, it’s noticeable that of a list of top picks in the mining sector produced by Credit Suisse, none has significant iron ore exposure, and the only one with any tangible and immediate connection to the iron and steel business is Coal India (NSE:COALINDIA).
In base metals, Credit Suisse backs old stalwarts Lundin (TSE:LUN) and Boliden (TSE:BLS) on the basis that there will likely be a “major supply crunch” in zinc.
On the whole though, gold remains the space to be in, according to the Swiss. Agnico Eagle (TSE:AEM), Eldorado Gold (TSE:EGO), Detour Gold (TSE:DGC), Acacia Mining (LON:ACA), Zijin Mining (HK:2899) all make it onto the Credit Suisse “Global Top Picks”.
But what of the reset of the London contingent, outside of Acacia, which Credit Suisse argues is due for double digit margin increases this year?
The answer is that Brexit has already locked in huge gains and sterling weakness adds a layer of uncertainty that’s not a current risk in any of the other major mining markets.
After all, spare a thought for those poor down-at-heel chaps at Goldman Sachs. Goldman rated Fresnillo (LON:FRES) a “sell” at 1,194p as recently as 15 June. The price is now well over 1,900p, blowing Goldman’s call well out of the water for the foreseeable future.
That’s a performance that’s been mirrored by Randgold in London, up by more than 30% in sterling terms to 9,730p at the last count.
But it’s not all about sterling. Closer to home, Goldman also called Gold Fields (JSE:GFI) a sell at R63.8, setting a R50 price target. Today’s price is R80.
Let’s hope the Swiss can do a little bit better than that.