by Mark O’Byrne, Gold Core:
– UK investors buy gold bars as demand surges 39% in 2016
– Brexit Day sees Article 50 triggered and pound weakens
– “Brexit nerves” see “Brits hoard gold” reports WSJ
– End of 44 year relationship with closest economic partner
– May sets Brexit clock ticking in letter to Tusk
– UK PM says “A great turning point in our story”
– Threat as security raised as negotiating tool
– Brexit uncertainty to impact business and economy
– Robust demand for gold coins, bars due to political and economic uncertainty
– French elections in 3 weeks & U.S. ‘Civil War’ politics
– UK National Debt now £1.84 trillion
As the UK triggered its formal departure from the European Union yesterday, gold demand from UK investors remained ongoing and robust with increased numbers of British investors diversifying into physical gold in order to hedge the considerable uncertainty and volatility that the coming months and years will bring.
The U.K. government yesterday triggered Article 50–the legal mechanism which will start negotiations on how the UK will exit the EU – after the British voted to leave the EU last June.
This is creating considerable uncertainty and concerns about the political and economic outlook – both for the UK and for the EU itself.
Demand for gold bars by UK investors has surged 39% in 2016 according to GFMS as reported by the WSJ:
The resulting political and economic uncertainty helped drive a 39% rise in U.K. gold bar hoarding in 2016, according to Ross Strachan from GFMS, part of media group Thomson Reuters.
“Macroeconomic fears are conducive to increased investment demand in gold,” Mr. Strachan said. During and after the global financial crisis, he pointed out, global gold bar investment increased from 237.7 metric tons in 2007 to 1246.9 metric tons in 2011.
Given the scale of the uncertainty created by the UK decision to leave the EU, robust gold demand in the UK should continue.
Indeed, given the fact that cohesion of the European Union itself will be tested and there is the risk of contagion, gold demand in the EU should also remain robust. Ireland and the Irish economy is particularly vulnerable.
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