Gold Prices Continue to Reach New Highs Due to Brexit Fears
Jul 06, 2016, 09:00 ET
NEW YORK, July 6, 2016 /CNW/ - http://www.FinancialBuzz.com - Expected were concerns over the stability of the global economy after the United Kingdom voted to leave the European Union. While global stock markets rebounded from the initial panic reaction, the aftermath concerns linger on, thus the continued rise of gold prices. Market Vectors Junior Gold Miners ETF (NYSEARCA: GDXJ), Brazil Resources Inc. (BRI.V), Direxion Shares Exchange Traded Fund Trust (NYSEARCA: NUGT), Barrick Gold Corporation (NYSE: ABX), Newmont Mining Corp (NYSE: NEM)
Gold prices have had an incredible run so far this year. Futures increased by about 24% year to date, and experts claim that there is still upside. According to Yahoo Finance correspondence, Anthem Blanchard, CEO of a popular precious metals dealer Anthem Vault, stated, "The trade has really just begun here… I think it's very limited, the risk. I think there's a ton of upside in the price. I think in relative terms it's a very safe time to buy [gold]. I don't see a lot of downside." Anthem Vault has about $2 billion in client assets under control.
Blanchard also had some opinions on the infamous Brexit vote, saying that Brexit may start a chain reaction across the European Union and other countries may have a similar vote. "So ultimately that can create a lot of credit risk in the markets, a lot of derivative risk and that bodes very well for gold and silver demand," he added.
Meanwhile, gold exchange-traded funds and stocks have reached new 52 weeks highs. Price per share of Market Vectors Junior Gold Miners ETF (NYSEARCA: GDXJ) has crossed the $45 mark, which didn't happened since July 2014. Junior gold companies in particular have enjoyed very impressive run-ups. Shares of Brazil Resources Inc. (TSX-V: BRI), continue to surge alongside other Gold companies and ETFs, a 281 million market-cap company, increased in value by about 640% year to date from $.38 to $2.84. The stock is currently trading at all-time highs.
Brazil Resources Inc. is a mineral exploration company with a focus on the acquisition, exploration and development of projects in Brazil, United States, Canada and other regions of the Americas. Recent developments for the company include the new gold resource for the Raintree West deposit within the Whistler Project Whistler, located in South Alaska. The new resource estimated deposit provides for a total inferred resource of 1.991 Moz gold equivalent comprised of 1.428 Moz gold equivalent below the 100 metre elevation (Zone A) and 0.563 Moz gold equivalent above the 250 metre elevation (Zone B).
The highly popular among gold traders and investors Direxion Shares Exchange Traded Fund Trust (NYSEARCA: NUGT) continues its positive reversal which started on January 20th, increasing in value by more than 700% since then.
Stocks of larger cap companies are back at trading at highest prices since early 2013. Barrick Gold Corporation (NYSE: ABX) crossed the $22 a share mark, and Newmont Mining Corp (NYSE: NEM) is trading at above $40 a share.
Gold price is seen as a safe haven for many investors, and the metal will continue to be in demand for as long as the narrative of concerns over global instability and especially in Europe continues to loom.
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