Brits flock to gold amid Brexit fears
The Pure Gold Company, which buys physical gold and silver on behalf of individuals, reported a 324% increase in the number of people purchasing physical gold bars and coins this week. Gold is seen as an investment safe haven during times of uncertainty.
The increase in gold purchases is likely to have been caused by prime minister Theresa May’s vote in the House of Commons on Tuesday on her Brexit deal. This was defeated by 230 votes and means that both the future of the government and the path ahead for Brexit hang in the balance.
“Just last night, we saw a 173% increase in enquires (compared to the average over the last 12 months) as it was announced that Theresa May’s Brexit deal succumbed to the largest defeat for a sitting government in history,” Josh Saul, chief executive of the gold investment business, explained
“We remained open until 10pm taking orders from panic-stricken investors, as many of them expressed concern over the prospect of either a general election and/or the UK leaving the EU without a deal and the effect this will have on our economy.”
Why are they buying gold?
Since the beginning of 2019, The Pure Gold Company has seen a 71% increase in the amount of people purchasing gold for their pension of Sipp (self-invested personal pension).
“Our clients are not purchasing gold for growth, it’s more about safety and security in the event of market failure. The trend is simple – as most asset classes fall in value, gold tends to increase and for this reason people purchase the yellow metal in anticipation that equities and property prices continue to be volatile,” Saul explained.
The Royal Mint, a government-owned mint which produces coins in the UK, has also seen a significant increase in demand for gold so far in January and at the end of last year. Bloomberg reported that Chris Howard, director of precious metals at The Royal Mint, also puts this down to the UK’s uncertain exit path from the EU.
“We have no doubt [it] is largely attributed to Brexit turmoil and subsequent market volatility,” he said.
In spite of the uncertainty in the UK, the gold price has fallen from $1,294.80 on 3 January to $1,289.10 today. This is likely to be down to the fact that equity markets across the globe have started to recover, following the sell-off that took place in the fourth quarter of last year.