Do you remember when George Soros ‘broke the Bank of England’ and made £1 billion in profits from the exit of the Pound from the European Exchange Mechanism?
A young David Cameron was working for the Chancellor to try and prop up the Pound in a European agreement to track the German Mark. The idea was Britain would benefit from tracking the German currency because it would force workers to accept lower wages and therefore make British companies more productive and competitive.
How? If British companies could not rely on a falling Pound to make their exports cheaper, then they would have to ensure wage discipline. It didn’t work. The connection between a worker wanting higher wages, and the exchange rate is too far removed.
Politicians have never understood the markets as well as hedge fund managers. And we hedge fund managers understand it better than employees and the public. So how as a hedge fund manager can I tell you how to make money from Brexit – the way Soros did when the Pound effectively made a currency exit from Europe and plummeted?
Well you need to know that nowadays it is so easy to open an online trading currency account. It is done in minutes. You then, like at the airport, buy one currency and sell another. For Brexit you focus on GBP or pounds and you sell then against US dollars. You then use those same dollars to buy back even more pounds later, once the pound has dropped and become cheaper.
But here is what I think is going to happen. Always follow the money. Start with the bookies. They have hard money immediately at stake on the vote and they think the vote will be ‘Remain In’.
The other hard data hedge funds look at are technical information on where money bets are being placed on the international markets. Presently the market is betting on a fall of the pound. Put 1 and 1 together and the bet hedge funds are making is that the pound will fall even if we vote to stay in.
This may not make sense to you all. But it makes perfect sense to us hedge funds. We expect the polls will show in the days before the vote that we will Remain In. So we will buy Pounds. But as soon as the results are announced, we will all race to take our profits – and that will drive the Pound lower. Simple.
So there you have it. How you can be the next George Soros and break the Bank of England and become a Billionaire.
Alpesh Patel
