The Weekly Dig
Mick Carew, PhD, mcarew@haywood.com
Haywood Mining Team
Markets Down/Gold Higher as Britain Vote to Leave the
European Union
§
The full ramifications of the surprise
outcome of the British referendum on Thursday are unclear. The final result,
which saw a 52-48 percent victory to Brexit advocates sent markets lower,
albeit arguably not by as much as some predicted. Following the result, the
British Pound fell almost 10% against the dollar to levels last seen in 1985,
on fears the decision could hit investment in the world's fifth-largest
economy, threaten London's role as a global financial capital and cause many
months of political uncertainty. Closer to home, the Dow Jones Industrial
Average and S&P 500 Index both fell 3.4% and 3.3%, while in Canada the
S&P/TSX Composite Index fell 1.7%. As investors focussed on the short-term
effects of the decision, the future of the European Union, and even the United
Kingdom, have been brought into question. Already, a number of separatist
parties in countries including France, Greece, Italy and the Netherlands have
been bolstered by the result, and called for similar referendums that could see
the European Union dissolve further. Meanwhile, citing the majority “remain”
vote cast by Scotland and Northern Ireland voters, there is growing speculation
that Scotland could hold another referendum to decide whether to remain with
the U.K. The price of gold responded in kind, hitting almost $1,360 per ounce
during Friday trading before settling at $1,320 per ounce (↑1.5%). Silver
(↑1.5%), platinum (↑1.6%) and palladium (↑2%) were also up for the week. Base
metals, with the exception of nickel, also rose, with copper (↑3%), lead (↑1%)
and zinc (↑2%) finishing at $2.13, $0.77 and $0.91 per pound. WTI crude was
down 1.4% this week while the UxC Weekly Spot Price of uranium finished higher,
closing at $26.88 per pound.
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