Gold Price Falls As Brexit Vote Nears

Today is a big day for the UK, Europe, and really, the rest of the world. That's because today is the day that the British people will be voting on the Brexit referendum. At the moment, it seems as though investors are expecting a stay vote, based on the movement we're seeing in silver. Nonetheless, things could go either way. Today, we'll talk about why investors are expecting a stay vote, why it matters when it comes to gold, and whether or not I believe a Brexit is even probable. So, let's get right to it...

Investor Opinions Shift Substantially

Over the past few weeks, we've seen big gains in the value of gold, and much of this was caused by the probability of a Brexit. For the most part, investors have expected for British consumers to vote for an exit, and for good reason. It seemed like every poll that was released was calling for an exit vote.

Nonetheless, that's changing. Recent polls are showing that the stay side is winning the race in polls at the moment. This is causing a major shift in investor opinion, leading to declines in the value of gold. As new polls continue to show that the British people are likely to cast votes to stay in the EU today, investors are no longer expecting for a Brexit to happen.

What Does This Have To Do With The Price Of Gold

At first glance, it may seem as though gold and a Brexit are 2 completely different topics. However, you might be surprised at how connected the two topics actually are. The reality is that if the UK consumers do vote to leave the EU, the action could lead to global economic hardships.

The first economic issues would be seen in the UK and in Europe. If a Brexit is voted for, the UK will feel pain as the result of having to renegotiate global trade agreements, leading to a standstill in economic growth. On the other side of the coin, Europe would no longer have the support of the UK to fall back on. This would lead to major economic pain in Europe.

Because of global trade, the problems wouldn't likely stay localized to the UK and Europe. In fact, because these are two of the largest economies in the world, we would likely see an incredibly negative global economic effect.

Because gold is a safe haven investment, we tend to see gains in the value of the commodity during negative economic times. So, the economic struggles an exit vote would lead to would likely cause incredible gains in the value of gold.

Is An Exit Vote Likely?

At this point, it's really a toss up. While the most recent polls are showing a sizable lead in consumers voting to stay with the EU, the exit side was sharply in the lead at the beginning of the week and for weeks before then. So, if we're following the polls, what we're seeing is a toss up.

However, I have to imagine that the British people understand what they are voting for or against. With that said, they must be at least somewhat knowledgeable with regard to the effects of their decision. With that said, while I do believe that the vote is going to be an incredibly close one, I am hoping for the British people to vote to stay with the EU. When it comes to the global economic stage, this would be the best possible outcome.

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