Gold fell 1.3 % in dollar terms and 3% in sterling terms today as sterling and global stocks surged as Brexit worries ease slightly.
The prospect of Britain leaving the EU is causing widespread jitters. ‘What will it really mean?’ was examined by Emma Kennedy, the Personal Finance Editor of the Sunday Business Post yesterday (excerpts follow):
“With less than a week to go until British voters decide on the future of their country’s relationship with Europe, investors and markets are very jittery indeed.
In this climate, gold, a traditional safe haven for investors, has soared.
Demand for gold could rise further if Britain exits the European Union.
“There’s been record demand for gold in the first quarter,” particularly from institutional investors, said Mark O’Byrne, research director at Goldcore.
“The big investment houses, the hedge funds, the likes of Munich Re and Blackrock” are all taking an interest in gold, according to O’Byrne.
He believes that gold will “fall back” if British voters decide to remain within the EU. In this scenario, he also predicts a “relief rally” as stock markets bounce back after the pre-vote jitters. “The fast money will liquidate,” he said, indicating that some investors would move away from gold.
“If they do vote to leave though, gold will rise,” he predicted. “Gold thrives in that uncertain environment. It is largely inversely correlated to other asset classes.”
However, O’Byrne believes that, whatever way the vote goes, the fundamentals of gold are “very strong”.
“One of the big negatives often discussed in relation to gold was that it ‘doesn’t yield anything’, but many bonds have negative yields now,” he said. This is something he sees as a big factor for investors considering an allocation to gold within their portfolio.
In O’Byrne’s view, investors need to look beyond June 23. “Brexit is a short-term thing,” he said. “But there are bigger global factors too: negative interest rates, the scale of geopolitical risk.”
On those risks, a few things will affect investors in the months to come, according to O’Byrne. “The rise of Trump, the polarisation of politics globally,” he said. “A lot of our clients are worried about the ramifications of the US election. A lot of people are nervous about equities and bonds.”
A rise in risk aversion is also good news for deposit takers. However, a flight to cash is a tricky choice for investors, given the low interest rate environment.
In a Brexit scenario, some asset classes – and some geographies – will perform better than others, experts say.
If Britain votes to leave, BlackRock’s Turnill said “the assets you want are ones that benefit from a risk-off – like gold, potentially areas like long-dated US treasuries”.
See full article in Sunday Business Post here
Gold and Silver News
Gold eases in Asia as weekend Brexit polls head ‘Remain’ way (Investing.com)
Gold slides 1 percent as Brexit worries ease slightly (Reuters)
INTL FCStone hikes gold, silver margins on Brexit nerves in a relatively rare step (Reuters)
Uncertainties of Brexit making gold attractive as safe asset (Straits Times)
Brexit Alarms Propel Gold Investors to Near Record Rally Wagers (Bloomberg)
What Brexit could mean for your money and your business (Business Post)
Why the Fed Can’t Stop the Runaway Bull Market in Gold (Casey Research)
Central Bank Market Intervention Shows Redundancy Of Technical Analysis (GATA)
Groupthink Of Official Ireland On BREXIT (McWilliams)
Europeans are scooping up gold on Brexit fears (Business Insider)
Read More Here
Gold Prices (LBMA AM)
20 June: USD 1,283.25, EUR 1,132.08 and GBP 877.49 per ounce
17 June: USD 1,284.50, EUR 1,142.05 and GBP 899.41 per ounce
16 June: USD 1,307.00, EUR 1,161.14 and GBP 922.01 per ounce
15 June: USD 1,282.00, EUR 1,141.49 and GBP 903.04 per ounce
14 June: USD 1,279.40, EUR 1,140.84 and GBP 904.79 per ounce
13 June: USD 1,284.10, EUR 1,139.25 and GBP 909.27 per ounce
10 June: USD 1,266.60, EUR 1,121.07 and GBP 876.87 per ounce
Silver Prices (LBMA)
20 June: USD 17.34, EUR 15.30 and GBP 11.85 per ounce
17 June: USD 17.37, EUR 15.43 and GBP 12.19 per ounce
16 June: USD 17.71, EUR 15.79 and GBP 12.54 per ounce
15 June: USD 17.41, EUR 15.51 and GBP 12.26 per ounce
14 June: USD 17.25, EUR 15.37 and GBP 12.17 per ounce
13 June: USD 17.32, EUR 15.37 and GBP 12.23 per ounce
10 June: USD 17.32, EUR 15.33 and GBP 12.01 per ounce
Recent Market Updates
– Gold Surges to $1,313/oz – Fed Concerned Re Outlook, BREXIT and May “Consider Using Helicopter Money”
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– 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
– Silver Price To Surge 800% on Global Industrial and Technological Demand
– BREXIT Gold Diversification As Vote Fuels Market Uncertainty
– Gold Forecasts Revised Higher – Citi Says “Buy the Dip”
– World’s Largest Asset Manager Suggests “Perfect Time” For Gold