Precious metals – creating certainty in un-certain times

14 July 2016

The recent referendum resulting in the UK voting to leave the European Union has seen an immediate impact on global trading markets, currencies and commodity prices.

The British Pound and the Euro have both fallen significantly against the US Dollar in the wake of the result, with uncertainty remaining amongst investors and companies alike. Government bond yields have fallen to record lows as investors rush to put money in perceived safe havens, with precious metals providing an obvious appeal due to their financial strength in such times.

Gold hit lows of just above £1,000 in summer 2015, but the price staged a partial recovery earlier this year as investors grew nervous about the prospects for global growth and other economic threats, including Brexit.

The day after the vote, the gold price in sterling jumped 20 per cent to more than £1,000 at one point, before settling back to around £960. The Royal Mint reported seeing a spike in purchases of its gold products across its business, with its bullion trading website seeing a 550 per cent surge in visitors compared with the day of the referendum. Even larger increases in value have been seen in silver in the aftermath of the vote. 

What does this mean for clients within the precious metals industry?

With demand rising for precious metals, particularly gold and silver, amounts being held by the industry will be increasing, both in terms of volume and value. With this in mind and the un-certainty likely to remain for several months, protection of valuable metals is crucial.

With values increasing significantly in just a matter of weeks, customers with large deposits of gold, silver and jewellery could see the value of their inventory increase and potentially leave them under insured. 

Meanwhile, whilst there is currency fluctuation occurring, prudent companies will review their insurance policy limits and ensure their sub-limits are adequate in terms of transit and storage of materials.

The clear message at the moment is that it is ‘business as usual’ for the London Insurance Market and the appetite and capacity for the insurance of precious metals and valuables remains extremely high. 

For further information, please contact Barry Vickery, Senior Partner, Fine Art, Jewellery and Specie on +44 (0)20 7528 4598.

contact Barry Vickery
Senior Partner, Specie Fine Art and Jewellery