Gold Bullion Surges 6% In USD as BREXIT Creates Global Contagion Risk

Note: Our trading desk will be open until 1800 UK time today (BST) and from 0700 UK time Monday morning (Monday 27th), in order to deal with the increased demand for precious metals.

Gold Note
– There has been record online sales on the GoldCore website for this time of day and the phones are ringing off the hook. We have had more sales than during the Lehman crisis and at the height of the Eurozone debt crisis. It is nearly all buying with a preference for gold over silver. We may have to restrict trading to existing clients if we continue to see this level of demand.

– We are seeing more selling then expected and seeing some clients choosing to take profits after the very sizeable short term capital gains. As a percentage of overall trading though, sellers are vastly outnumbered by buyers.

– Bullion inventories had already been increased to record levels and we are confident that the UK leaving the EU will lead to a sustained increase in coin and bar buying in the coming months.

 


BREXIT_GOLDMarkets Today (Finviz)

Facts
– Sterling and euro have fallen sharply on fx markets
– Gold surged 20% in sterling to £1,015/oz
– Gold now 14% in higher in GBP at £960 per ounce
– Gold 8% higher in EUR and 5% higher in USD
– Stocks globally are down sharply – FTSE down 9%
– European stocks down sharply – Euro Stoxx 50 Futures collapsed over 11% at the open
– Bank shares are down 20% to 25%
– Cameron has resigned – adding to uncertainty in markets
– Record online sales at this time of day for GoldCore
– Nearly all buying with a preference for gold over silver
– Some selling – with some investors choosing to take profits after sizeable short term gains

Ramifications
– There is the real risk of contagion in the EU
– UK leaving the EU increases the risk of the EU disintegrating as it greatly increases the risk of France, Italy, Spain, Netherlands and Greece following the UK
– This poses risks to the “single currency,” the euro as these nations may revert to their national currencies
– Still fragile UK, French, Italian, Spanish, Greek and Irish banks are coming under pressure
– The uncertainty and shock is likely to undermine business and consumer confidence and likely lead to a recession in the UK and will likely impact an already vulnerable Eurozone and global economy
– Central banks are likely to embark on further QE and further devalue currencies in order to prevent recessions

UK
– The UK is likely to enter recession which will lead to further QE and see sterling devalued more over the long term
– The UK total debt to GDP ratio is over 450% which also poses severe risks to the economy and sterling
– UK banks remain vulnerable and in the event of contagion will likely see bail-ins and deposit confiscation
– British people, companies etc are very exposed to sterling. One way to hedge and protect against that risk is to diversify into physical gold and silver.

Ireland
– The sharp fall in sterling versus the euro is likely to lead a serious fall in Irish exports to the UK which will impact jobs and the Irish economy. This combined with already heightened global risks may lead to a recession in Ireland – impacting the Irish stock and property market
– Longer term the euro looks very vulnerable and may collapse as warned of by Soros and many others
– Irish banks remain vulnerable and in the event of contagion will likely see bail-ins and deposit confiscation
– Irish people, companies etc are seriously exposed to the euro. The way to hedge and protect against that risk is the diversify into gold.

Conclusion
– The Brexit vote underlines the importance of owning gold as vital financial insurance in these uncertain times. The degree of risk means that investors should consider having higher allocations of 25% to 30% to physical gold and silver coins and bars.

Gold Prices (LBMA AM)
24 June: USD 1,313.85, EUR 1,181.28 & GBP 945.58 per ounce
23 June: USD 1,265.75, EUR 1,112.22 & GBP 850.96 per ounce
22 June: USD 1,265.00, EUR 1,122.31 & GBP 862.98 per ounce
21 June: USD 1,280.80, EUR 1,129.67 & GBP 866.72 per ounce
20 June: USD 1,283.25, EUR 1,132.08 & GBP 877.49 per ounce
17 June: USD 1,284.50, EUR 1,142.05 & GBP 899.41 per ounce
16 June: USD 1,307.00, EUR 1,161.14 & GBP 922.01 per ounce
15 June: USD 1,282.00, EUR 1,141.49 & GBP 903.04 per ounce

Silver Prices (LBMA)
24 June: USD 18.04, EUR 16.32 & GBP 13.18 per ounce
23 June: USD 17.29, EUR 15.16 & GBP 11.61 per ounce
22 June: USD 17.20, EUR 15.23 & GBP 11.72 per ounce
21 June: USD 17.36, EUR 15.34 & GBP 11.78 per ounce
20 June: USD 17.34, EUR 15.30 & GBP 11.85 per ounce
17 June: USD 17.37, EUR 15.43 & GBP 12.19 per ounce
16 June: USD 17.71, EUR 15.79 & GBP 12.54 per ounce
15 June: USD 17.41, EUR 15.51 & GBP 12.26 per ounce


Gold News and Commentary
GoldCore experienced record online sales for the time of day and may have to restrict trading to existing clients if demand remains high (Bloomberg via Business Times Singapore)
Elderly customer fearing economic collapse asked if she could invest all of her life’s savings in gold, despite the recommended investment level of 15% (WSJ)
Gold Sees Biggest Gain Since 2008 in Rush for Havens From Brexit (Bloomberg)
Gold Soars as Investors Seek Haven Following ‘Brexit’ (WSJ)
‘Buy gold’ searches soar 500pc after Britain votes to leave EU: here’s how to get your hands on the yellow metal (Telegraph)
Pound Plunges to Lowest in More Than 30 Years as Brexit Looms (Bloomberg)
Deutsche Bank to shut 188 German branches, cut 3,000 staff (CNBC)

Gold Soars Most In 42 Years For British Buyers (Zero Hedge)
Britain Votes to Leave E.U., Stunning the World (NY Times)
EU Referendum Live (Telegraph)
U.K. votes for Brexit: Latest on the fallout from the EU referendum (Marketwatch)
Britain votes leave: Don’t panic – this is an opportunity (Money Week)
Read More Here

Recent Market Updates
– BREXIT Day – Markets Becalmed – Gold Panic Prelude – Trading Hours
– Gold Lower Despite “Panic” Due To “Supply Issues” In Inter Bank Gold Market
– Gold Slips Despite UK Gold Demand Surging – Investors “Seek Stability”
– Gold Prices Surge to Highest in Nearly Two Years On FED and Brexit Haven Demand
– Gold Bullion Has Little Downside, Brexit Or Not, Says HSBC
– Central Bank of Ireland Warns Risks are Debt, Brexit, Geopolitical Tensions and Migration
– Gold In Euros Surges 6.5% In June and 17% YTD On BREXIT Concerns
– Soros Buying Gold On BREXIT, EU “Collapse” Risk
– UK Gold Demand Rises On BREXIT “Nerves”
– Pensions Timebomb in “Slow Motion Detonation” In UK, EU, U.S.
– Silver – Perfect Storm Brewing in the Market
– Martin Wolf: There Will Be Another “Huge” Financial Crisis

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