British bullion dealers are reporting difficulty in keeping up with demand, as crowds frantically load up on gold ahead of the looming Brexit vote. Long-time London bullion market maker Sharps Pixley told Reuters that it had become impossible to keep gold bars and coins on the shelves in its tony St. James St. showroom in Mayfair.
Sharps Pixley CEO Ross Norman told Reuters "It seems to have sunk into people's consciousness that Brexit is a real possibility now. All stocks are being bought out in advance of even being shipped."
Various gold merchants are reporting even higher demand since several polls have indicated that the "Leave" side may win the June 23 Brexit vote.
Gold: Good For Young And Old
Britain's largest online gold dealer, Bullion By Post, is predicting an even greater gold run should the Brexit vote succeed. Founder Rob Halliday-Stein told The Telegraph that he expects to do £10 million of sales in one day, should a Brexit occur. "We have a number of large clients waiting to place orders" if there is a Brexit, he said.
If you have a stereotype in your head of the average gold investor being a stodgy old moneybags, you'd be off the mark. Again, Sharps Pixley CEO Ross Norman: "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." This meshes with recent trends of younger Europeans eschewing banks, and keeping more of their savings in gold. With Europe being the birthplace of bank bail-ins, their views are understandable.
One gold product that stands out when examining the surge in British gold demand is the gold Britannia investment coin struck by the Royal Mint. As a UK legal tender coin, it is exempt from capital gains tax.
$1308: The Magic Number
Analysts are expecting a Brexit win to lift gold above the psychologically significant $1,308 level, if prices don't breach that level beforehand. $1,308 marks the 2015 high mark of gold, so a close above this level could be the signal that investors who have been on the sidelines need to jump back in.
HSBC analysts believe that gold could jump 10% to $1,400 an ounce, should there be a Brexit. They also note that a "Remain" vote will not cure the uncertainty and headwinds facing the European economy, providing an underpinning of gold prices.
Even if the "Remain" side wins the Brexit vote, the UK and EU both will still face negative bond yields, lasting deflation, and high unemployment, making Europe ripe for new economic shocks. It is these cases where gold provides good insurance for your portfolio..
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product