Above all other near-term factors that have influenced the financial markets, the looming Brexit vote in the U.K. has had by far the most immediate impact.
Polling over the past several weeks has shown a wild vacillation between which camp holds a lead in the vote. Whereas the "Remain" side of the debate (also expressed as "Stay" or "In"), which is in favor of maintaining the status quo, appeared to be the far more likely scenario during the first several months of the campaign, the "Leave" or "Brexit" cohort has increasingly gained ground as we get nearer and nearer to tomorrow's vote.
Voters Respond to Tragedy
Now, the sentiment appears to have swung back the opposite direction where "Remain" is back out in front. This was undoubtedly affected in a dramatic way by the senseless assassination of British MP (Member of Parliament) Jo Cox last week. According to eyewitness accounts, the attacker shouted, "Britain First!" during the brutal act of violence. This slogan has been associated with right-wing groups who are ardent supporters of Britain exiting the EU.
Out of respect for Cox and her family, supporters on each side of the fence agreed to suspend their public campaigns through this past weekend.
The rhetoric on both sides of the Brexit debate has been disappointingly shallow. While both camps have rightly been accused of exaggeration, scaremongering, making misleading arguments, and even peddling outright falsehoods, the association of the euroskeptic movement with a murderous extremist has soured many undecided voters on the idea of leaving the EU altogether.
Still, the latest polling shows that the decision is neck-and-neck. In general, younger Britons are more supportive of Pan-European projects like the EU and support membership in the continental bloc, while older demographics skew more toward "Leave" in favor of greater sovereignty and autonomy for Britain. With most polls showing that at least 10% of respondents are undecided, it's worth keeping in mind that undecided voters are typically more inclined to support the status quo.
Gold Offers Safe Ground
It's been widely understood that gold offers the safest harbor from the potential upheaval wrought by a vote to sever Britain's political union with Europe. (However, there have been some rumblings that Parliamentary prerogative trumps the referendum result, which is apparently non-binding, anyway.) This has been borne out in the fluctuations of the gold price: When the likelihood of a Brexit seemed highest, gold prices surged above $1,300/oz; likewise, prices have fallen since these anxieties have subsided somewhat.
Some sources have suggested that spot gold could jump as high as $1,400/oz if indeed the British voters choose to leave the EU. Regardless of the long-term implications, there is little disagreement that a Brexit will have a negative economic impact on the U.K., Europe, and even the United States—though the "Leave" campaign believes these risks have been overblown.
Meanwhile, Britain's largest online bullion dealer has told the media that it projects a staggering £10 million ($14.7 million) in gold sales in a single day following the referendum if the vote tilts toward "Leave."
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.