Brexit Fears Cause Gold Price To Climb

This month is a very interesting month for the global economy, and therefore, gold. For some time, the major discussion around the world among financial experts has been summed up in one word... Brexit. In fact, the thought of a Brexit is causing gold to climb in price dramatically today. Below, we'll talk about what a Brexit is, why it's leading to big gains in the price of gold, and the potential the discussion has to raise the value of gold much, much further.

What Is A Brexit

The term Brexit is actually a play on words. The term follows what started by the term Grexit, which stood for a Greek exit from the EU. This time around, instead of Greece, Britain is the primary topic. Essentially, there are several politicians and financial experts that believe that the relationship between Britain and the EU is weighing heavy on the British economy. As a result, they are pushing for Britain to cut ties with the EU.

While there are plenty of supporters of a Brexit, there are also plenty of people that are against the idea. Those against the Brexit believe that the economic impact that would be caused by the action will be far worse than keeping the relationship open.

Because the political sides couldn't agree on whether or not a Brexit is a good move, they are leaving it up to a vote. Later this month, the British people will be casting their votes and deciding if leaving the EU is a good idea.

Why This Is Having Such A Positive Impact On Gold

To understand why the idea of a Brexit is sending the price of gold skyrocketing, it's important that you understand gold's relationship with global economic conditions. You see, gold is considered to be a safe haven investment. This means that when investors and consumers fear for tough economic conditions to come, they tend to purchase gold as a way to keep their money safe. This leads to big spikes in the demand for gold, and gains in the price of the precious metal. That's exactly what we're seeing today.

At this point, the conversation revolving around a Brexit is reaching its climax. At the end of this month, a vote will be cast, and the move will either happen or not. If a Brexit does happen, it will likely have an extremely negative effect on the state of the global economy. After all, Britain is one of the world's largest economies. Because of global trade, when one economy struggles, we tend to see the effects of the situation around the world. So, if a Brexit were to happen, it would likely lead to global economic hardship. This, in turn, would cause markets to fall, and, ultimately, the demand for gold will skyrocket even further. In fact, if a Brexit were to happen, it could send the price of gold to record levels.

What We Can Expect To See Moving Forward

Moving forward, this is a bit of a toss up. At the moment, EU opposition is leading the charge in the polls. In fact, there's a 6 point lead, which doesn't look good for those hoping that a Brexit won't happen. With that said, while anything can happen, it does indeed look like the Brexit will pass. As mentioned above, this is likely to lead to global economic struggles, which in turn will send the value of gold upward. So, now may be a great time to get in on the gains.