Note: Due to increased inquiries and demand, our trading desk will be open until 1900 BST today and resume trading from 0700 BST tomorrow.
BREXIT Day and the UK EU referendum is upon us today and investors are expecting more choppy trading in financial markets in the coming hours. The City of London is bracing itself for potentially the most volatile night since the sterling devaluation on Black Wednesday.
This morning, as British voters headed to the polls, sterling hit a 2016 high versus the dollar and gold in sterling terms fell to £844 per ounce, down 10% from a high of £928.85 per ounce just 5 trading days ago on June 16.
While the gold market is on the surface becalmed, there has been very significant high net worth and institutional demand in recent weeks and this is leading to an, as of yet, unacknowledged and unappreciated “panic” in the interbank gold market due to unprecedented conditions and “supply issues” as we revealed yesterday.
Gold and silver may come under further selling pressure in the short term, especially if the remain side wins the referendum. However, any weakness is likely to be short term due to the increasing risks of a global recession, risks posed by negative interest rates and bail-ins and many geo-political threats throughout the world. Illiquidity and supply issues in the London Good Delivery inter bank gold market also bode very well for gold.
A vote to stay could be considered priced in to markets now. In the event of a leave vote, stock markets will sell off sharply and safe haven gold and silver will likely rally especially against the euro and sterling.
World stocks remain very buoyant despite the risks and have climbed for a fifth day running. Risk appetite remains high and markets appears somewhat complacent about the still real risks of a vote to leave the EU and indeed other global risks.
Despite the most recent polls clearly showing the result is set to be extremely close, markets are very much pricing in a vote to remain. This creates the real risk that a vote to leave leads to dislocations, sharp corrections and potentially crashes in stock markets. A Brexit vote would likely lead to a very sharp correction, with the FTSE 100 plummeting. Swiss bank UBS has warned of sharp falls to levels of between 4,900 and 5,500, wiping off around £350 billion from the market.
The official result is not expected until 0600 GMT or later on Friday morning. The markets will begin to react, potentially very rapidly, from when the first results are announced in or around 0100 GMT, especially if they are showing the leave camp in the lead.
Some hedge funds have commissioned their own exit polls in order to get vital intelligence ahead of the market. Thus, sharp moves ahead of the official results may be perceived as certain market participants having advance knowledge of the result. Market manipulation and the usual trading ‘shenanigans’ are to be expected. Another reason to avoid the short term noise and focus on the long term and the importance of owning quality, value assets in a diversified portfolio.
Our trading desk will be open until 1900 BST today and from 0700 BST tomorrow morning (Friday 24th), if you need to buy or sell precious metals.
Gold Prices (LBMA AM)
23 June: USD 1,265.75, EUR 1,112.22 & GBP 850.96 per ounce
22 June: USD 1,265.00, EUR 1,122.31 & GBP 862.98 per ounce
21 June: USD 1,280.80, EUR 1,129.67 & GBP 866.72 per ounce
20 June: USD 1,283.25, EUR 1,132.08 & GBP 877.49 per ounce
17 June: USD 1,284.50, EUR 1,142.05 & GBP 899.41 per ounce
16 June: USD 1,307.00, EUR 1,161.14 & GBP 922.01 per ounce
15 June: USD 1,282.00, EUR 1,141.49 & GBP 903.04 per ounce
Silver Prices (LBMA)
23 June: USD 17.29, EUR 15.16 & GBP 11.61 per ounce
22 June: USD 17.20, EUR 15.23 & GBP 11.72 per ounce
21 June: USD 17.36, EUR 15.34 & GBP 11.78 per ounce
20 June: USD 17.34, EUR 15.30 & GBP 11.85 per ounce
17 June: USD 17.37, EUR 15.43 & GBP 12.19 per ounce
16 June: USD 17.71, EUR 15.79 & GBP 12.54 per ounce
15 June: USD 17.41, EUR 15.51 & GBP 12.26 per ounce
Gold News and Commentary
Gold Edges Higher as Decision Day in U.K. Puts Markets ‘All on Edge’ (Bloomberg)
Gold touches two-week low as Britain gears up for EU vote (Reuters)
Gold ETF Investors Look Past Brexit, Lift Assets to 2-Year High (Bloomberg)
Brexit gold rush: Scared Brits stockpile bars & coins, just in case (RT.com)
Britons queue to exchange pounds ahead of referendum (FT via Zero Hedge)
FACTBOX – How will Britain’s EU referendum vote count work on the night? (Reuters)
Nervy global investors revisit 1930s playbook (Reuters)
Ten reasons why I’m voting to leave the EU – Frisby (Money Week)
Brexit hoopla diverted our attention from real problems – Edwards ( Business Insider)
George Soros wrong on Brexit and UK economy, says City economist (Guardian)
Silver Options Traders Follow Gold To Longest Bullish Bet Since 2009 (Zero Hedge)
Why gold could ‘brenefit’ regardless of Brexit vote outcome (CNBC)
Read More Here
Recent Market Updates
– Gold Lower Despite “Panic” Due To “Supply Issues” In Inter Bank Gold Market
– Gold Slips Despite UK Gold Demand Surging – Investors “Seek Stability”
– Gold Prices Surge to Highest in Nearly Two Years On FED and Brexit Haven Demand
– Gold Bullion Has Little Downside, Brexit Or Not, Says HSBC
– Central Bank of Ireland Warns Risks are Debt, Brexit, Geopolitical Tensions and Migration
– Gold In Euros Surges 6.5% In June and 17% YTD On BREXIT Concerns
– Soros Buying Gold On BREXIT, EU “Collapse” Risk
– UK Gold Demand Rises On BREXIT “Nerves”
– Pensions Timebomb in “Slow Motion Detonation” In UK, EU, U.S.
– Silver – Perfect Storm Brewing in the Market
– Martin Wolf: There Will Be Another “Huge” Financial Crisis