Gold price tops $1,300 in rush to safe havens after Brexit vote - and gains are far steeper if you bought using sterling

  • Gold price in sterling jumped 20% to more than £1k at one point
  • Price later settles at around £960, and $1,300 if you buy and sell in dollars
  • Gold mining stocks also stormed ahead on a day when most shares were mired in the red

The gold price shot above $1,300 today as investors sought refuge from market tumult after the UK's vote to quit the EU.

But the gain was far steeper if you were buying or selling gold with pounds, after the UK currency took a hammering following the Brexit result and fell sharply from $1.50 to $1.36.

The gold price in sterling jumped 20 per cent to more than £1,000 at one point, before settling back to around £960, while the rise in dollar terms was a more modest 4 per cent.

The Royal Mint reported seeing a spike in purchases of its gold products across its business today, with its bullion trading website seeing a 550 per cent surge in visitors compared with yesterday.

Shiny asset: Gold mining stocks stormed ahead on a day when most shares were mired in the red on London's market

Shiny asset: Gold mining stocks stormed ahead on a day when most shares were mired in the red on London's market

It said its Signature Gold service, which allows people to purchase fractions of gold bars starting at around £20, has been particularly popular, with sales up by 100 per cent by 11am on Friday compared with the whole of Thursday. 

Gold mining stocks also stormed ahead on a day when most shares were mired in the red on London's market, led by Randgold with a 14 per cent gain and Fresnillo which surged 12 per cent in value in early trading.

Many people still hold gold as a store of value and safe haven asset - a hedge against inflation and other financial hazards - despite suffering big losses since its all-time price peak of $1,900 an ounce in 2011.

Gold hit lows not much above £1,000 in summer 2015, but the price staged a partial recovery earlier this year as investors grew nervous about the prospects for global growth and other economic threats, including Brexit.

'Gold rocketed this morning as the shock UK referendum result saw carnage in financial markets, prompting a rush to safe haven assets,' said Ross Norman, boss of bullion broker Sharps Pixley.

'With sterling falling to its lowest in 30 years, the biggest gains were seen in gold for UK investors which rose 20 per cent in just a few minutes.'

'Sharps Pixley has seen its busiest day ever with online sales draining our stocks of our larger bullion bars and prompting them to call on emergency reserves of kilobars from Germany. The stocks of many coins have also been bought out with only limited availability today.'

Trading trends: Gold has topped $1,300 again, but the gain was far steeper if you wanted to buy or sell the precious metal in pounds

Trading trends: Gold has topped $1,300 again, but the gain was far steeper if you wanted to buy or sell the precious metal in pounds

Norman added: 'Gold has done what it does best and that is to provide investors with protection against currency weakness and political uncertainty - it is a safe haven asset with wealth preservation properties. The prescient investor has been well rewarded by his caution.

'We have always cautioned against betting on gold for short term outcomes, but over the long term it does what it should and that is to provide people with financial insurance.'

Adrian Ash, head of research at BullionVault.com, said: 'The surging gold price clearly shows the panic sweeping financial markets.

'This is just the kind of crisis which gold helps savers and investors insure against. Gold offers certainty and security as stock markets and currencies sink, just as it did during the 2008 meltdown. The difference is that this shock was clearly signposted, and many private investors didn't wait for today's result to get prepared.

'By last weekend, the number of new UK customers starting to use BullionVault in June was 75 per cent ahead of the last 12 months' daily average. That rate of growth has now risen to 84 per cent.'

For gold mining stock watchers, Randgold was up 890p at 7,345p this morning, Fresnillo was ahead 144.5p at 1,383.5p, Centamin rose 9 per cent or 9.3p to 118.2p, Hochschild Mining gained 8 per cent or 11.9p to trade at 169.4p and Polymetal International jumped 4 per cent or 38.8p to 909.25p.

Darius McDermott, managing director of financial services firm Chelsea & FundCalibre, said: 'This is a defining moment in our history – not least because the polls were right and the bookies were wrong!

'But the world won't end. And as we know from quite recent experience, markets bounce back and good companies continue to thrive in the longer term. I would actually even be tempted to buy into the market dips – not huge amounts, but small lump sums.'

He included a gold fund among his investment tips to see people through the current volatility - Blackrock Gold & General.

'Gold is a hedge against uncertainty and there is likely to be a lot of uncertainty in the coming months. Other EU countries may demand their own referendums. Volatility is likely to increase. On top of this, the global economy is fragile.

'Some exposure to a gold equity fund should help hedge against these risks. The BlackRock Gold & General fund has a very long track record and is managed by mining specialist, Evy Hambro.'

WHAT ARE THE WAYS TO BUY GOLD?

Savers have a number of ways of buying gold as an investment, writes Simon Lambert.

Physical gold is the main way to tap direct into actual gold, by buying bullion or coins. This can either be done through a traditional dealer or through an online service such as GoldMadeSimple, or BullionVault. You can read more about how to do this on the World Gold Council's website

Exchange Traded Commodities are also a direct route into gold. ETCs, like Exchange Traded Funds, track a particular sector, or in this case commodity.

They are passive investments and should merely mirror gold's moves, although some will offer leveraged returns or the opportunity to short the price. Make sure you understand the difference between ETCs that are physical (actually buying gold) and synthetic (set up to mimic its price). Read this guide to ETFs. 

Funds enable investors to buy into a basket of shares of gold miners, producers and associated companies. However, the performance of individual firms does not always echo gold's rises and falls, and in fact, gold mining shares can fare worse than the gold price - especially smaller companies.

Full guide: How to invest in gold.  

 

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