Gold brokerage GoldCore has opened an institutional-grade vault near Dublin as clients are expected to move their holdings from London to other jurisdictions as Brexit concerns mount.
As Goldcore announce the opening of a vault near Dublin, gold demand surged in the UK by almost 400% compared to the daily average in 2018. Growing concern about the political future of the UK and the Brexit debate, as well as a loss of confidence in Theresa May all fueled the demand. Storage for the GoldCore vault is managed in collaboration with Loomis International. Since the vault’s soft launch on Oct. 15, 30% of demand has come from GoldCore’s customers moving metal from London, according to CEO Stephen Flood.
Brexit uncertainty fuelling gold purchases
CEO Josh Saul, of gold investment firm The Pure Gold Company which has seen a 398% increase in investors purchasing physical gold since Tuesday, said: “We had a 79% increase in first time investors purchasing physical gold yesterday, with many unsure where the UK will be (both politically and financially) in a few months from now. Uncertainty is at an all-time high with some clients predicting a “No Deal Brexit”, others predicting another referendum, and a growing number of people citing the possibility of a removal of the prime minister from office. Some believe this would be catastrophic for confidence especially given the potential candidates who could replace her.
38% of clients who invested in gold yesterday also purchased gold when the outcome of the Brexit referendum was announced in 2016, when sterling plummeted and gold jumped more than 23% in just a few hours. Yesterday sterling briefly fell to a 17-month low after the contempt of parliament vote, whilst the gold price increased by almost 1%. There are many factors affecting the gold price, including a weakening currency, which can be a catalyst for a rise in the gold price.
Wealth protection through gold
Mr Saul continued, “Our clients are not investing in physical gold to make money or grow their portfolio. It’s more about wealth protection and a hedge against uncertainty, which increases the safe-haven appeal of gold. Physical gold essentially sits outside the banking system and people feel shielded from the decay that appears to be spreading across markets. Investors hope their gold will not surge in value as this will likely indicate that their equity portfolios are losing value.
67% of clients who purchased gold yesterday were financial professionals who work in banking, accountancy and the legal profession. They are unsure how the UK will be governed in 2019 and who will be leading us. The continuing trade war in China and USA and the stark warning from the Bank of England last week regarding a possible recession leads our savvy investors to think things are likely to get worse before they get better.
“Since the beginning of November, we have seen a 278% increase in people removing exposure to equities within their pension and SIPP to purchase gold within the same vehicle. Many investors close to retirement cannot afford to endure another month like October where equity markets fell by 5%. Gold increased by almost the same amount which is why people who used gold as a hedge are in a neutral position, which for many is the objective of investing in gold.”