Immediately Britain voted out of the European Union, reality began to unfold. Three days after the exit, the country’s stocks plunged. The value of the sterling pound plummeted, and people started to put the thoughts of consequences of the action into gold.
People were worried about the effects of the exit on financial institutions. They were doubtful of banks’ ability to hold themselves together without being swallowed up in the aftermath. Others were driven by the fear of the unknown.
Dealers including the Federal Reserve Bank are beginning to see an unprecedented increase in interest in gold, especially from new buyers. People believe there are consequences of Britain’s action to quit the EU hence they are using gold as a haven to secure their life savings in case everything goes wrong.
The rate at which people are purchasing gold has increased. People stream the Federal Reserve premises every day to convert their life savings in gold. Many of them are converting between 40 and 50 percent of their net worth into gold. This is an unprecedented increase by 30 percent from the purchase rates before the exit.
Following the June exit, the Federal Reserve saw a five-fold increase in the sales of 100 grams bar of gold. In the same week after the exit, more than 4 million people traded in gold online. London-based Bullioncvault.com also reported the same figures in the same timeframe.
The number of new buyers has increased by 180 percent since the exit. Property owners in Britian are also feeling the heat. Many of them acknowledge that the financial uncertainties associated with the exit have never been seen before in the British economy. Projects are frozen because of fear. As a result, many developers have shifted their focus on gold.
This is the first time in history dealers have seen a significant increase in gold purchase since the 2008 and 2009 economic crisis. This surge simply means that gold is still a number one alternative means of trade and exchange. Before the World War One, billions of golds were circulated as the main currency in several countries. Almost every country determined the value of its currency from a standard index generated from gold evaluation.
Many dealers currently value Brexit gold at £1,000 per ounce. If the Brexit develops into an economic crisis, buyers who invested in gold will be glad they took the action when the price was at £1,000. This is because gold prices rise significantly within four to five years of the economic crisis.