Brexit And Gold. How Disruption From Normal Creates Wealth
In my last article I wrote about how gold this summer could see either the usual summer doldrums or it could see a summer time rally all depending on what happens with Britian and if decides to leave the EU. Well yesterday the votes came in and the message for the leaders is that the majority of Britian wishes to split from the EU and go it alone. Of course stuff like this makes for uncertainty and that is not good for stocks and bonds and all those sort of items. But uncertainty is sure good for gold and it showed. At one point in time gold was up $100 an ounce. At the end of the day gold closed up about $60 or 4.7% higher.
One would have thought that silver would have followed through with the same kind of percentage rise. It did rise of course as with other metals but not to the same degree. Silver closed up only 48 cents or 2.78% gain. Palladium fell $16 to end end the day at $548.00. Oil was also lower by a couple of bucks and the Nikkei inn Japan was down over 1200 points. All base metals were down also by 1-3% overall.
Looking at the numbers above and with what is happening in the world today is one of the reasons why owning gold is a great idea for investment and insurance. For those of us who live in countries outside the USA like here in Canada, gold was up almost $100 at the end of the day. That puts the price of gold at $1730 CAD per ounce. Back in 2011 when gold hit $1900 an ounce in US dollars, the CAD dollar was pretty much par. But today with the exchange rate, while gold is still almost $600 down from it's 2011 high in US dollar terms it is less than $200 away from it's old high. Whether you own physical gold bullion or own a gold claim, your sitting good on days like we've just seen.
So what really happens now? From what I read there is a number of other countries that want to split from the EU also. France, Spain, Italy and maybe even a few others. When this happens it brings with it a lot of uncertainty into the financial markets and like I mentioned before, uncertainty is something that is not liked unless your a gold bug. There are a lot of analysts who think that this could be the issue that sets the next bull market in gold on it's way. Once stock markets start to dive and sell off, money needs to go somewhere. Everywhere you look it seems that everything is in a bubble of some kind whether it be real estate, stocks, bonds what have you. So there is a feeling and sense that gold will be the place for money to flee into. This of course is good for the miners and the juniors who are exploring. Raising money just gets a bit easier. Maybe raising additional funds will be in the works for some juniors. Extra money could mean the difference between staying in business or going bust. The junior mining market has suffered greatly in the last few years and could use some doom and gloom in world affairs and maybe Brexit is that doom and gloom it needs.
For those who trade the junior much like I do, you will want to keep some extra cash on hand for any junior that is showing some promising results especially if it is a gold junior. Some of these buys can result in some dramatic gains like 100% or more. A lot of the juniors we are following in gold have gained over 200% since the beginning of the year. You won't want to miss out on any of these opportunities and if the some of the other countries decide to split we coud very well see more days like we did last week.
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