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Panic On The Streets Of London ... Can Scotland Ever Be The Same Again?

GoldCore's picture




 

There is now less than one week of campaigning remaining before the Scottish Independence Referendum, which takes place next Thursday, September 18. 

The pro-union ‘no’ vote campaign is back in the lead this week after the latest opinion poll from pollsters YouGov put them at 52%, marginally ahead of the pro-independence ‘yes’ campaign.

The referendum question being asked is simply “Should Scotland be an independent country?”

After being ahead significantly since the outset of the independence campaign, the pro-union side was abruptly shocked last weekend when the pro-independence side took the lead based on an opinion poll result, also from YouGov, released on Saturday, September 6. 

This forced the pro-union campaign into panic mode this week with the UK witnessing an unprecedented coordinated campaign between all the main political parties. who are pro-union, and a number of major UK companies to try to convince the Scottish electorate to stay in the United Kingdom.

Scotland’s financial sector became one of the main battlegrounds this week, with many Scottish headquartered banks and financial services companies first threatening to relocate their headquarters to London and then actually announcing that they will move south if the referendum outcome results in a ‘yes’ majority. 

The HQ move threats and announcements appeared to be part of an orchestrated corporate campaign run by the UK’s Treasury department and the Treasury did not deny this.

According to the banks, they are seeking to move because an independent Scotland would create too much economic, regulatory and financial risk and uncertainty for their headquarters to remain there.

Amongst the banks, two of the UK’s biggest banking institutions, the Royal Bank of Scotland (RBS), and Lloyd’s led the charge. Crucially, since the RBS and Lloyds were both bailed out by the UK government during the financial crisis, the UK government is now a significant shareholder in both institutions, owning a whopping 80% of the RBS and 25% of Lloyds. 

RBS has been headquartered in Scotland since 1727 and employs 35,000 north of the border. Lloyds owns various institutions including Bank of Scotland (not to be confused with the Royal Bank of Scotland), Halifax and Scottish Widows, the pensions and life insurance group.

Scotland’s third biggest bank, Clydesdale, owned by the National Australia Bank (NAB) said it also planned to relocate its HQ to London, again citing the uncertainty that a yes result would generate. Other banks such as the TSB and Tesco Bank also followed suit and said they too would move.

Many of the banks’ and asset managers’ share prices had been hit on the London Stock Exchange this week due to the pro-independence movement’s lead including the share prices of RBS, Lloyds, Aberdeen Asset  Management and Standard Life.

Financial services giant Standard Life joined in, saying that it would relocate large parts of its operations such as pensions and investments out of Scotland if the country voted for independence. Dutch asset manager and insurer Aegon said it too would move operations to London.

Other industry leaders also sided with the pro-union alignment with the CEO of the UK’s largest oil company British Petroleum (BP) saying that the company and the economy was “best served by maintaining the existing capacity and integrity of the United Kingdom”.

Scottish first minister and pro-independence leader Alex Salmond said that the corporate announcements had been orchestrated by the prime minister’s office in Downing Street in London, and that Treasury had been ‘caught red-handed in a campaign of scaremongering”.

According to the FT, a Treasury official admitted that “Danny Alexander and George Osborne have been making calls.” George Osborne is the Chancellor of the Exchequer and Danny Alexander is his assistant at the Treasury. The calls to RBS would have been quite easy to make given the government’s 80% shareholding. Likewise with Lloyds.

As RBS and Lloyds are already essentially run from London, the HQ move announcements do appear to have been more politically motivated than anything. HM Treasury does appear to have been bullying and pulling strings behind the scenes. On one hand it says plans by companies to move were ‘understandable’, while on the other hand it has been making phone calls encouraging companies to move.

Elsewhere, Mark Carney, the Governor of the Bank of England, became involved in the debate which is slightly surprising given that the Bank of England is supposedly neutral of political interference. Carney said this week that a currency union between Scotland and the rest of the UK  is incompatible with an independent Scotland. 

Media mogul Rupert Murdoch chimed in, hinting that he was on the side of pro-independence, most likely because of his current coolness towards the Westminster leaders,  while financier George Soros weighed in on the pro-union side.

There is much to lose for the City of London’s financial sector due to the economic uncertainty and sterling currency risk of an independent Scotland and the loss of financial power, international standing and resources that a smaller UK would represent.

The International Monetary Fund (IMF) also became involved this week warning that “the main immediate effect is likely to be uncertainty over the transition to a potentially new and different monetary, financial and fiscal framework in Scotland.”

The pound sterling has fallen and risen this week based on the prevailing sentiment expressed in the various independence polls. Sterling strengthened today following the latest poll but had touched an 11 month low earlier this week against the dollar.

In terms of sterling, the gold price has not really moved significantly over the last month, remaining in a £20 trading range between £780 and £760, although the price did fall from the £780 range on Monday down to £760 today, slightly more than the US dollar denominated price move in gold, but in  in general sentiment to the weakness in the US dollar gold price.

Scotland’s bid for independence has also crystallised nationalist aspirations in other countries, most notably in Catalonia which is on the brink of its own unofficial referendum to try to break away from Spain. Yesterday was National Catalan Day and millions protested across the region most notably in  Barcelona.

There has been much speculation this week about how the UK’s gold reserves would be affected if an independence result emerges. The UK Treasury said that all Treasury reserve assets would be up for negotiation. Since this is a very general statement it does not provide much clarity as to whether an independent Scotland would be able to take any of the UK ‘s gold reserves, but this did stop various media outlets from appearing to think that Scotland would get its share of the UK gold

At this stage it is best to adopt a wait and see attitude since there are too many unknowns for any factual conclusions to be reached on the future of the UK, let alone future UK fiscal plans.

Whatever the outcome of next week’s independence referendum in Scotland, it has illustrated that the UK is a economic entity which is in some parts held together by groupings that do not have the same outlook. The closeness of the results for the two campaigns suggests that if the pro-union campaign wins, they will still have to address the concerns of the large Scottish independence movement, and calls for a future referendum on the subject may not go away. 

Economic uncertainty in the UK will remain in the near term and it is hard to see the UK economic landscape ever being quite the same again after the heated campaigning on both sides of the independence issue.

MARKET UPDATE
Today’s AM fix was USD 1,237.25, EUR 957.11 and GBP 760.87 per ounce.
Yesterday’s AM fix was USD 1,247.00, EUR 964.20  and GBP 767.53 per ounce.

Gold fell $7.90 or 0.63% to $1,242.10 per ounce and silver slipped $0.27 or 1.42% to $18.71 per ounce yesterday. For the week, gold is down 2.27% while silver is 2.56% lower. 


Gold in US Dollars - 2 Years (Thomson Reuters)

The gold price closed New York trading yesterday at $1,240.10 and fell to a January low of $1,232 in Hong Kong overnight. Gold in Singapore recovered to test the $1,240 level but was turned back at $1,240 prior to going in to London trading where gold is flat.

Palladium fell 2.24% today to $829, and is down 6.53% for the week on profit taking after reaching a multi-year high the previous week. Platinum is trading at $1,364 and is down 0.94% since yesterday and down 2.98% on the week.

FOMC ‘Jawboning’ Next Wednesday
A dilemma awaits the US Fed governors at the two day FOMC meeting next week (16-17 Sept) and at the end of meeting press conference, the FOMC members will have to decide whether to amend their interest rate forward guidance language which currently states that Fed funds rates will be kept near zero for a ‘considerable period’.


Gold in Sterling - 2 Years (Thomson Reuters)

Although there are now a number of Fed governors on the hawkish side, such as the Philadelphia and Cleveland governors, will this be enough to sway a consensus towards amending the language, and would the phrase just be dropped or would there be conditionality added such as interest rates will remain as is until unemployment or inflation data justifies adjusting the current outlook?

There is a market expectation that some sort of fine tuning of the language will occur next week. The Fed will probably subtly amend the language while trying to keep their options open. If this happens it would cause a short term dollar rally since the market would then expect interest rates to rise at an earlier stage in 2015 than previously expected. And rising interest rates mean higher nominal returns for dollar denominated assets. In this scenario, the gold price would come under pressure due to a stronger dollar.

With the recent non-farm payrolls growth data coming out as weak, can the indebted US consumer and economy absorb an interest rate increase? When interest rates begin to rise its usually part of a rising trend, not just a one off rate rise. Are the Fed prepared to follow through with a change of course at this early stage? These are just some of the questions that may be answered by the FOMC press conference next Wednesday.

In our view, the Fed will probably adjust the ‘considerable period’ language at the FOMC meeting next week by adding conditionality to the language linked to an improvement of economic performance such as unemployment data.

If this occurs, the US dollar could have a short term rally on the back of the FOMC announcement since this is not yet fully priced in to the US dollar. This then is a real risk for gold because the gold price would most likely come under pressure as the US dollar strengthens.

Any US dollar rally would in our view be short-lived, since the Fed is not fully committed to increasing rates and is to an extent just engaged in the management of perceptions.

Therefore, any dollar rally would probably fizzle out shortly after it had begun. The fundamental reasons to own allocated and segregated gold remain intact.

 

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Sat, 09/13/2014 - 09:42 | 5213747 Charming Anarchist
Charming Anarchist's picture

No matter what happens, I hope Scots take a few steps back and get all nostalgic ----- nostalgic enough to spit-shine their old coin collection and start trading the old-fashioned way with their fellow Scots, be they in the country-side or on the streets.

Sat, 09/13/2014 - 02:27 | 5213504 JimboJammer
JimboJammer's picture

Go  Scotland . . . . . 

 

Sat, 09/13/2014 - 08:12 | 5213669 Dame Ednas Possum
Dame Ednas Possum's picture

Let's just hope TPTB do not intervene and rig this outcome in their favour. Surely Rothschild won't be sitting back with nothing to say...

Stalin said: "Those who cast the votes decide nothing. Those who count the votes decide everything." Just ask Dubya.

The Scottish people voting for independence and autonomy would certainly buck the trend towards a unified, centrally controlled world and would give many others food for thought.

FREEDOM...

Sat, 09/13/2014 - 02:15 | 5213495 Captain Obvious.
Captain Obvious.'s picture

Scotland decided to hitch their wagon to the English Empire way back when it was a good idea.

Why should they remain? Where is the Empire now?

Sat, 09/13/2014 - 00:05 | 5213335 JimS
JimS's picture

Scotland should start The Bank of Scotland, issue their own currency, and not have a fractional reserve system. Control the amount of currency that is set forth, adjusting it upward only as the productivity and population grow. DO NOT allow any private bankers to get in the middle of the system, as they will ALWAYS fuck it up. Every one in Scotland should read "The Lost Science Of Money", and then start a sensible banking system where the bank must have at least one dollar of capital. Basically the banks are a utility, cashing checks, taking deposits, and lending out money matched/linked to deposits by the length of time of each (loans to deposits). Everything would turn out fine, under that scenario.

Sat, 09/13/2014 - 08:46 | 5213694 nathan1234
nathan1234's picture

Scotland should start The Bank of Scotland,

Without the Rothschilds

Fri, 09/12/2014 - 21:32 | 5212967 exartizo
exartizo's picture

It is possible that Bonnie Scotland is the Spark of Reality that awakens the civilized world and lights the tinder of Central Banking demise as embodied by the One World Government meme known as The Euro.

Scotland, as is well known after all is the undisputed Cradle Of Civilization.

It is therefore fitting and ironic that the Banksters undoing should start in a far away cold land with simple but strong and honest people who are willing to defy the shroud of corruption and decay that is the Euro Zone.

The Euro has destroyed England.

Scotland should escape.

Fri, 09/12/2014 - 22:05 | 5213071 All is chosen
All is chosen's picture

"Scotland, as is well known after all is the undisputed Cradle Of Civilization"

Aye, yer right there son! 

https://m.youtube.com/watch?v=8k7VoFiagfs

Fri, 09/12/2014 - 21:23 | 5212962 messymerry
messymerry's picture

**** OFF TOPIC ****

I know this is off topic, but I felt you all need to be aware of this:

The CBC is warning Canadians about a U.S. program where America law enforcement officers — from federal agents to state troopers right down to sheriffs in one-street backwaters — are operating a vast, co-ordinated scheme to grab as much of the public's cash as they can through seizure laws.

http://beta.slashdot.org/story/207105

Protect yourselves and respond accordingly...

Fri, 09/12/2014 - 21:12 | 5212936 paint it red ca...
paint it red call it hell's picture

So the banks are threatening to leave Scotland for London eh?

Where do they think the new Scottish government would be willing to deposit those North Sea Oil Royalty checks, in London?

Fri, 09/12/2014 - 23:00 | 5213203 disabledvet
disabledvet's picture

Deposit in Banks in New York....

Sat, 09/13/2014 - 06:14 | 5213615 paint it red ca...
paint it red call it hell's picture

Same thing.

Fri, 09/12/2014 - 20:23 | 5212803 AdvancingTime
AdvancingTime's picture

Several complex issues surround the idea of going off on their own. If Scotland wants independence then so be it, but sorting out the political and economic ties with the rest of the UK, may be difficult. Scotland has to be allowed to stand on its own two feet without the rest of the UK financially and economically supporting it. The Euro proves that more than one sovereign country cannot easily use the same currency.

Portugal, Ireland, Greece, Italy and Spain have discovered that you cannot have full independence and share a currency. Another problem is that if the UK Government is to agreeable to a separation, will Wales and Northern Ireland move towards independence? That might encourage similar movements in Catalonia, Belgium, Northern League in Italy, Basques, Cornish, and among the Poles.  More on the issues surrounding the pound and an independent Scotland in the article below.

http://brucewilds.blogspot.com/2013/06/british-pound-and-independant-sco...

Sat, 09/13/2014 - 03:43 | 5213558 Jack Sheet
Jack Sheet's picture

Fuck off, and take your pathetic blog pimping with you.

Fri, 09/12/2014 - 22:00 | 5213057 All is chosen
All is chosen's picture

Grrrrrr. Stop it AT!!

Fri, 09/12/2014 - 19:19 | 5212582 CheapBastard
CheapBastard's picture

Seems to me insurance companies and banks need customers more then customers needing bankers and insurance agents. There is NO shortage of insurance companies and banks that would love to serve the frugal, oil-wealthy, hard-working, honest Scot from what I see. Let those insurance agents all head back to England and sell their policies to broke Muzzie and jobless MENA immigrants.

There may be reasons pro and con for Scotland to be independent but threats from this sector should make the Scots think even more seriously about breaking away.

 

Remember, customers/taxpayers bailed out bankers and insurance companies, not the other way round.

If Scotland works hard, it can become a stronger banking center then Switzerland.

Fri, 09/12/2014 - 18:31 | 5212453 theprofromdover
theprofromdover's picture

Presumably all these banks and insurance companies think they can find enough competent staff at all levels somewhere in London if they relocate their principal offices.

Shows how no good they are at business, or how weak they are when hustled by government.

RBS is lucky they are still alive; Lloyds were a very healthy bank until PM Gordon Brown said they had to be handicapped down to the level RBS had sunk after buying ABN Amro, and made them buy the basket case that was Bank of Scotland. They have now had to sell off the TSB part. Clydesdale will be bought from NAB by some bright Scottish bankers. Tesco will be stupid to move. Santander have a growing presence in Scotland, and all sorts of foreign banks will be very excited to move into Edinburgh's financial centre.

Scotland will become a very powerful banking location in the future, as long as they create their own currency, stay well out of the Euro, and write some very tough financial ethics laws.

(Or it will go broke if it sticks with the incompetent politicians who have no idea how to run a girl scouts cookie drive)

Fri, 09/12/2014 - 20:21 | 5212796 walküre
walküre's picture

AS IF they would relocate! Just bullshit fearmongering.

And if they leave tell them not to let the door hit them on the way out!

RBS is BANKRUPT.

Time to throw this entire bullshit financial system into the trash bin of history.

Fri, 09/12/2014 - 18:18 | 5212420 litemine
litemine's picture

Looks like a true Capitalist Opportunity.........A Scottish Credit Union. With a Gold Backed Currency.   Life without Central Bankers.....A Dream Come True. I'd invest in it..........A free trading Platform........with Transparency.......

Who would have Thunk it............................

Fri, 09/12/2014 - 17:57 | 5212367 ebworthen
ebworthen's picture

I fear the Free Shit Army has taken over in Scotland/U.K. just as much as here in the U.S.A.

Once that Rubicon is crossed no votes for independence, nor fiscal or individual responsibility, can pass.

Fri, 09/12/2014 - 17:31 | 5212295 RaceToTheBottom
RaceToTheBottom's picture

I would think that having some Banksters threaten to relocate to London could be an opportunity to create new old style banks doing normal non speculative things.  Scotland  has a long financial heritage, worldwide, probably longer than London.  Plus London only really grew after big bang.

I still think it would be good for Scotland and their own financial sector to leave London.

 

Fri, 09/12/2014 - 17:26 | 5212283 Conax
Conax's picture

Anything the globalists want this badly, that can be denied by pulling a handle, well, if I were a Scot I know how I would vote.

Fri, 09/12/2014 - 16:51 | 5212213 Racer
Racer's picture

Having the banks move out of Scotland IMO is a win win for the people of Scotland! No banks to bail out in future when they go belly up .... again

Fri, 09/12/2014 - 17:07 | 5212249 Racer
Racer's picture

Goes to show how arrogant the banks are, that they think that they are a benefit to a country after what they have done!

Fri, 09/12/2014 - 16:23 | 5212122 disabledvet
disabledvet's picture

Much to win for Wall Street too...

Fri, 09/12/2014 - 16:20 | 5212113 Gringo Viejo
Gringo Viejo's picture

Not even an Anglo-Saxon Nation anymore. Gone like a fart in the wind.

You want muzzies. You got muzzies. Sucks to be you.

Fri, 09/12/2014 - 20:26 | 5212817 walküre
walküre's picture

Hadrian's wall was meant to kept the Northern "Barbarians" from entering the South.

Now it's polar opposite.

Fri, 09/12/2014 - 16:19 | 5212107 Seasmoke
Seasmoke's picture

The Queen is Dead. 

Fri, 09/12/2014 - 19:03 | 5212556 Cacete de Ouro
Cacete de Ouro's picture

A rush and a push and the land that
We stand on is ours
It has been before
So it shall be again

Sat, 09/13/2014 - 03:47 | 5213557 jackstraw001
jackstraw001's picture

Do you really think
She'll pull through?
Let me whisper my last goodbyes
I know - IT'S SERIOUS

Sat, 09/13/2014 - 07:35 | 5213659 Cui Bono
Cui Bono's picture

How soon is... Thursday?

Sat, 09/13/2014 - 09:07 | 5213713 jackstraw001
jackstraw001's picture

If it's not Love
Then it's the Bomb
That will bring us together

Fri, 09/12/2014 - 16:16 | 5212098 detached.amusement
detached.amusement's picture

with krugman and soros against it, its got to be a good thing. 

Fri, 09/12/2014 - 19:56 | 5212730 NoDecaf
NoDecaf's picture

They'll find a way to spin it into an opportunity. Soros will suggest rebuilding Hadrian's wall and staffing it with Ukrainian Nazis. Krugman will write an op-ed saying how great it'll be for the English economy.

Fri, 09/12/2014 - 16:15 | 5212094 Democratic koolaid
Democratic koolaid's picture

Would not doubt that more then a few English are secretly pulling for independance.

 It give a flicker of hope that someone somewhere not to far might start countering the destructive constructivness that plagues merry old England.

 

Fri, 09/12/2014 - 21:27 | 5212976 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

Indeed weeding out the rats nest of the City of London. The Scots should let the banks go. They should go along the lines of the Bank of South Dakota and issue their own debt free currency or they can have a "mixed bag" of RMB, ruble and the scottish unit of currency (what do they have? the haggis?). Maybe they should take up Ireland's old unit, the punt. "Why's it called a punt? 'Cos it rhymes with 'bank manager'"

Fri, 09/12/2014 - 23:43 | 5213301 JimS
JimS's picture

You dumb fuck! There is no "Bank of South Dakota". There is a State Bank of NORTH DAKOTA, you stupid fuck. Do some research before you shoot your mouth off.

Fri, 09/12/2014 - 20:04 | 5212746 Mitzibitzi
Mitzibitzi's picture

Well, I'm mixed Scottish/Irish/Welsh (with a bit of afro-carribean thrown in, a few generations back) by ancestry and I live in Wales. But, as I was born in England... you'd be entirely correct. The Scots are idiots if they don't take this opportunity to decide their own destiny (and I sadly must agree that there is more than a hint of Free Shit Army, so it may not end well). But, nothing ventured....

Fri, 09/12/2014 - 19:02 | 5212548 El Oregonian
El Oregonian's picture

Let's get the Queen Mum on a set of 'ol bagpipes! FREEDOM!!!!

Fri, 09/12/2014 - 21:28 | 5212983 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

What's the difference between an onion and bagpipes?

No one ever cries when you cut up bagpipes.

Sat, 09/13/2014 - 09:01 | 5213705 Manthong
Manthong's picture

Banks.. move,, “because an independent Scotland would create too much economic, regulatory and financial risk and uncertainty”

They fear risk?

If London or a bank tries that tactic..

Then stiff them on everything, conduct a self-declared jubilee.

Set a good example for the rest of the world.

 

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