News Flash: Gold Demand Surging in Great Britain in Advance of Brexit Vote

The British have gotten gold fever.

According to a Reuters report, uncertainty surrounding the upcoming Brexit vote is driving quite a gold boom:

At Sharps Pixley, a gold showroom in London’s smart Mayfair district, demand for bullion bars and coins is rising, with men and women of all ages buying up the safe-haven metal in case of a British exit from the European Union.”

Sharps Pixley chief executive Ross Norman told Reuters that stocks of gold coins and bars are selling out before they even hit the shelves. Demand for Britannia coins is particularly strong. Since they are legal tender, Britannias are not subject to capital gains taxes.

Norman said it’s not just the stereotypical buyer purchasing gold:

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.”

Booming sales are not isolated to Sharps Pixley:

ATS Bullion, nearby on London’s Strand, has also reported a 5-10% rise in sales while online gold dealing platform BullionVault.com, whose customers are largely private investors, said the UK is outstripping other regions in terms of demand growth this month. Growth in its UK customer base has been 59% higher in June than the average of the last 12 months, it said, compared to 5% higher in the other nine of its top 10 markets.”

Some analysts say it’s not just the impending Brexit vote that’s driving the demand for gold. Negative interest rates in Europe are a major contributing factor, along with the economic malaise that’s engulfed the EU. In fact, bullion merchant Baird & Co executive director Tony Dobra said he doesn’t even think the real impact of Brexit has hit the gold market yet. He believes more general concerns about the economy are driving current demand:

People are concerned, but they’re waiting for the result of the poll. I suspect that if there is a Brexit result, 24 June will be a very busy day.”

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In fact, global demand for gold and silver has been strong. Gold demand approached near record levels in the first quarter of this year, and the pace doesn’t seem to have abated. As we reported last week, May gold coin sales at the US Mint increased more than 206% over the same month last year. The mint sold 76,500 ounces of American Gold Eagles in May and 18,500 ounces of Gold Buffalos compared to 21,500 ounces of Gold Eagles and 9,500 ounces of Gold Buffalos in 2015.

What we’re seeing worldwide is classic safe-haven demand for the yellow metal. SchiffGold Precious Metals Specialist Dickson Buchanan explained it this way:

Gold historically attracts capital flows in ways that these other commodities do not. This is especially true during times of financial uncertainty, increased perceived risk, and global fears of entering a prolonged period of economic recession or depression. Gold’s recent price performance in the midst of a lot of economic uncertainty and talk of recession supports this thesis.”

It’s no surprise then that jitters over Brexit and more general economic instability in the EU is motivating Brits to buy gold.

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