{"id":2361,"date":"2018-07-19T10:45:41","date_gmt":"2018-07-19T09:45:41","guid":{"rendered":"https:\/\/www.ukbullion.com\/blog\/?p=2361"},"modified":"2019-02-21T12:51:45","modified_gmt":"2019-02-21T12:51:45","slug":"gold-goes-flat-whats-next","status":"publish","type":"post","link":"https:\/\/www.ukbullion.com\/blog\/gold-goes-flat-whats-next\/","title":{"rendered":"Gold Goes Flat: What\u2019s Next?"},"content":{"rendered":"

It\u2019s safe to say that those who\u2019ve been watching the gold price over the last few months<\/span><\/a> haven\u2019t exactly had the ride of their life. For the best part of a year now, the gold price<\/span><\/a> has barely moved, and volatility sits at its lowest point in some time. <\/span><\/p>\n

It\u2019d be fairly easy at this point to cash everything in, say that gold\u2019s had its day and decide that now\u2019s the time to move your money elsewhere. To do so, however, would be remarkably short sighted and would fail to account for the nature of gold as a commodity and the reasons it\u2019s remained so constant for so long. <\/span><\/p>\n

Let\u2019s take a moment to have a look at these reasons.<\/span><\/p>\n

Gold and volatility<\/b><\/span><\/p>\n

To be fair, gold has never been famous for its volatility. If risk and thrills are what you\u2019re looking for \u2013 then platinum and palladium<\/span><\/a> are where your money wants to be. Gold generally moves incrementally against inflation, remains constant for a long time and springs up in times of political economic uncertainty. <\/span><\/p>\n

While we\u2019ve (as of yet) not experienced any significant economic uncertainty since the recession \u2013 there\u2019s been plenty of political uncertainty. So you\u2019d certainly expect gold to be doing a lot more than it is. We spoke about this back when Kim Jong-Un and Donald Trump dominated the headlines<\/span><\/a> some weeks ago. <\/span><\/p>\n

The thing is, over the past few years, we\u2019ve been pretty much saturated with political uncertainty. Brexit, Trump, Catalonia, the Refugee Crisis, the Eurozone Crisis\u2026 the list continues. And that\u2019s before we\u2019ve even started on North Korea.\u00a0<\/span><\/p>\n

Gold\u2019s ability to act as a safe haven currency remains strong. But in an era when political crises occur every other week, investors have become somewhat immune to the panic. It\u2019s going to take something more than a quibble between world leaders to make the gold price soar. <\/span><\/p>\n

Another economic crisis would probably do the trick quite nicely. But let\u2019s not wish for another one of those any time soon.<\/span><\/p>\n

The Brexit factor<\/b><\/span><\/p>\n

That being said, whatever we wish, there\u2019s a good chance that Brexit will have more of a say in the gold price over the next few months<\/span><\/a>. <\/span><\/p>\n

Gone are the days of endless stalemate, deadlock and uncertainty. Just this last weekend the cabinet met and pulled together, after two years of dithering, something that looks like a plan. It\u2019s not without its controversy, as the resignation of two leading cabinet ministers proved. <\/span><\/p>\n

For better or for worse, however, this proposal from the Prime Minister will act as a catalyst for the markets \u2013 in whatever direction they choose to move. We might continue trading with the EU on broadly the same terms, or we might crash out with no deal and risk significant economic uncertainty. Either way, we\u2019re probably going to find out about it pretty soon. <\/span><\/p>\n

What does this mean for gold?<\/b><\/span><\/p>\n

The period of gold\u2019s low volatility correlates roughly with the length of time the government has been negotiating Brexit. The issue is so all-encompassing, yet has been so uncertain for so long, that it seems to have locked the gold price in place and made it much harder for any other external factor to make any tangible impact. It wouldn\u2019t exactly be the first time Brexit has had that effect. <\/span><\/p>\n

There are two main options for what will happen now. The first is, the deal, or some fudge-based variation thereof, passes both parliament and the EU. Big if. We\u2019d probably avoid large scale economic collapse in that instance, and continue trading on similar terms during the transition period. In that instance, gold would potentially return to its pre-2016 levels of volatility.\u00a0<\/span><\/p>\n

The second is if we collapse out in March 2019. The uncertainty in that situation would almost certainly trigger a spike in gold\u2019s value<\/span><\/a> \u2013 perhaps one even as significant as that seen after the original referendum in June 2016.<\/span><\/p>\n

If that happens, there\u2019s a good chance that other assets in your portfolio, cash assets stocks, shares and real estate, could quickly start to lose value. If they do, you\u2019re certainly going to wish you\u2019d bought gold back in July 2018 when it was cheap.<\/span><\/p>\n

Buy gold<\/span><\/a> and silver bullion<\/span><\/a> on our website.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s safe to say that those who\u2019ve been watching the gold price over the last few months haven\u2019t exactly had the ride of their life. For the best part of a year now, the gold price has barely moved, and volatility sits at its lowest point in some time. It\u2019d be fairly easy at this point to cash everything in, say that gold\u2019s had its day and decide that now\u2019s the time to move your money elsewhere. To do so, however, would be remarkably short sighted and would fail to account for the nature of gold as a commodity and the reasons it\u2019s remained so constant for so long. Let\u2019s take a moment to have a look at these reasons. Gold and volatility To be fair, gold has never been famous for its volatility. 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