Save, make, understand money

Experienced Investor

Gold prices set to surge further in the event of a Brexit

Written By:

Having risen 22% alone in April, analysts are predicting the price of gold could jump higher if the UK decides to leave the European Union in the June referendum.

Concerns regarding a slowdown in Chinese economic growth, the global market sell off in February, the oil market slump, indecision over more interest rate rises in the US and the weakening dollar, have all been contributory factors to the recent surge in the value of gold. Should a Brexit occur, analysts predict it could boost gold prices further.

More investors have been buying the gold metal as a result of the poor performance of markets and the weakening dollar. This is because gold is often considered to be both an inflation hedge and a ‘safe haven’ investment when stock markets are volatile. This is because it tends to, but not always, have low correlation to the broader economic environment.

Michelle McGrade, chief investment officer at TD Direct Investing, said for those investors thinking of investing in gold they might want to consider doing it through an Exchange Traded Fund (ETF).

“Investors interested in gold may want to consider ETFS Physical Gold, an ETF that is backed by gold bullion and that provides a return equivalent to the movements in the gold spot price,” she said.

“Investors may also want to consider an active fund investing in gold mining stocks for exposure to gold,” she added. “The BlackRock Gold & General fund invests in companies involved in gold mining and aims to deliver a return in excess of the FTSE Gold Mines Index.

“The fact it is an active fund means the manager has the flexibility to pick and choose the most attractive gold mining companies rather than tracking the entire index.”