As Great Britain moves closer to deciding if they’ll stay in the European Union, anxiety catapults its citizens turn to the safe haven metal, gold.
It’s not just U.S. and Asian investors clamoring to buy gold bullion anymore: Reuter’s Jan Harvey reports that U.K. demand is blooming due to concerns over a possible Brexit. Among other things, a British exit from the European Union would sink the pound against the dollar by 9% percent, boosting the price of the metal in sterling terms.
While a Brexit scenario was long discounted as unlikely, recent online polls showed that the ‘leave’ campaign is not only gaining traction but has actually become the majority opinion, making everyone realize the seriousness of the proposition.
In turn, investors have flocked to London’s Mayfair district which is home to various bullion dealers and their products. “It seems to have sunk into people’s consciousness that Brexit is a real possibility now,” said chief executive of Sharps Pixley Ross Norman, adding that Britannia coins are especially sought-after due to their status as a tax-exempt legal currency.
With the increased demand from Britons, multiple British bullion dealers are enjoying a notable increase in sales. London’s Strand seller ATS Bullion reported a 5-10% increase in sales while The Pure Gold Company saw a 19% increase in inquiries to buy gold bars. Likewise, BullionVault.com reported a 59% higher growth in their U.K. customer base in June, adding that it outstripped other regions in terms of demand growth. “Though interest in gold is markedly higher this year everywhere, in the U.K. it is significantly ahead. We can only attribute that to Brexit,” said BullionVault’s head of research Adrian Ash.
And while some point the finger to a possible Brexit as the main culprit behind increased demand, others believe there’s more to the story. Baird & Co bullion sellers said that wider concerns about the economy are driving demand, although they acknowledged that the passing of a Brexit vote would change this. “People are concerned, but they’re waiting for the result of the poll, said Baird executive director Tony Dobra. “I suspect that if there is a Brexit result, 24 June will be a very busy day.”
Mark Byrne, director of Dublin-based gold dealer Goldcore, echoed Dobra’s thoughts in saying that both the price bounce and broader geopolitical concerns are spurring demand while acknowledging Brexit’s role in the matter. “In the coming weeks, we’re expecting to be busy,” he said. “The recent polls (on Brexit) are going to create more jitters… that should lead to quite robust demand as we run into polling day.”
Perhaps the most interesting facet of the U.K. gold rush is its demographics: “We had a preconception of who the typical gold buyer was, which is male, mature and over 45. The mix of people coming through has completely rebuffed that idea — they’re often much younger, often female,” said Sharps Pixley’s Ross Norman. Regardless of the customer’s age and gender, they are free to choose from a number of investment options starting from 1 gram bars going for less than 50 pounds and going all the way to the 28,000-pound kilobars
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