GOLDBUGS are natural Brexiteers; intensely suspicious of large bureaucracies like the European Union and avid conspiracy theorists when it comes to the power of global “elites”. They had double reason to celebrate on June 24th, when Britain’s decision to leave the EU sent gold prices soaring. But the rise of the yellow metal is also a symptom of the fear that Brexit is unleashing on the global economy. Hence other commodities that are more dependent upon global demand, such as oil, fell sharply.
After a huge rally since their trough earlier this year, the commodities markets were vulnerable to a shock. Hedge funds and other money managers had built up big bets on rising prices. Meanwhile, inflows into exchange-traded funds linked to gold have been consistent since the start of the year, according to Deutsche Bank.
The heightened economic uncertainty in the aftermath of the Brexit vote may induce more investors to pile into gold, which rose to about $1,315 an ounce on June 24th, up by 4.7% on the previous day. Early in the day it experienced its biggest spike since the global financial crisis in 2008. The rise was particularly stark in sterling terms: bullion jumped almost 20% as investors sought a safe haven from the plunging pound, which tumbled to its lowest level in 30 years. Ross Norman, boss of Sharps Pixley, a retailer of gold bars, wrote on the company’s website that online sales were so strong that it had drained the firm’s stocks of larger bullion bars, prompting it to ship in “emergency reserves of kilobars” from Germany. Later in the day gold...