Original article written by Heather Farmbrough and published on Forbes.com on January 16, 2019.
One of the reasons gold is so highly recommended as an asset is because of its international appeal. Investors around the world flock to gold as a safe haven asset, which provides a constant prop to gold’s price.
Now that the UK is potentially going to exercise its right to leave the EU, gold demand in Britain is skyrocketing. Thanks to uncertainty surrounding Brexit, one popular online gold retailer in Britain sold more gold in two days this week than it did all of last week. And gold’s sterling price is rising too, with some speculating that it could surpass its all-time highs reached in 2011.
Some of the reasons that could lead to even more gold demand in the UK in the future include:
- Concerns about the details of Brexit;
- Fears about a disruption of trade in the event Brexit should take place; and
- The potential for a collapse of Prime Minister May’s government.
Because gold doesn’t operate in a vacuum, increased international demand for gold drives up its price in the US too. In fact, much of gold’s recent increase in price is due to higher European demand. Political uncertainty both in Britain and on the continent has boosted European gold demand.
Once economic conditions deteriorate further in the US too, gold demand here will increase even more and drive gold’s price up. That’s why we recommend that investors get into gold now before the price rises.
Investors who got into gold before the financial crisis saw their gold holdings gain 25% in value while stocks lost more than half their value. Investing in gold was a smart move then and it’s a smart move now too.
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This article was originally posted on Goldco.
