By David Byers
The resignation of Boris Johnson as foreign secretary could have ramifications for Britain’s Brexit prospects — but there is another consequence many may have missed.
Gold traders in Britain reported a 250 per cent spike in sales after his departure as nervous investors raced to remove their exposure to sterling and the markets. Arabian Pure Gold, a London-based trader, says it is reminiscent of the days around the Brexit referendum in June 2016. The chief executive, Josh Saul, says there has been a 193 per cent increase in the number of people removing equities from their retirement funds or personal pensions over the past three months to buy gold.
“The general sentiment is confusion and uncertainty,” Mr Saul says.
Traders say the trend is global amid fears of wider political instability in the wake of Donald Trump’s trade wars. Bullion Vault, an online gold trader, says gold-buying by private investors in Europe and North America has leapt five-fold in the past week with the total owned by its investors up to 38.8 tonnes, worth £1.2 billion. Adrian Ash, the director of research, says gold’s low price has boosted interest, although it hit a two-week high of more than £955 an ounce on Monday, falling to £942.32 by Thursday afternoon.
Glint pay, an app which lets you make everyday purchases in gold, is offering its first 50,000 gold Mastercard customers fee-free spending until the end of 2019. The app allows you to convert currency into gold and back to pounds.
The pros of buying gold
It can diversify a portfolio and is not as volatile as other assets. It cannot be easily manipulated by central banks and can give long-term inflation protection.
The cons
It doesn’t produce any income, interest or dividends, and its price depends solely on demand and supply. It will underperform over the long-term because it can’t compound over time. It is priced in US dollars, so non-US buyers take on a currency exchange risk.
Source: The Times
