Betashares Gold Bullion Up on Brexit Vote Results

What happened to the QAU share price?

Gold is up! By that I mean it is time for gold to fluctuate.

However, gold was literally up on yesterday’s close by midday trading. Betashares Gold Bullion [ASX:QAU] started to react to the Brexit vote counts by midday.

Make no mistake, it is time for volatility to take centre stage; volatility will arise if Britain really leaves the European Union, which would be an unexpected result from the referendum taking place today.

Why did QAU shares do this?

The entire market is now gravitating towards any change in the vote count statistics that are constantly coming out of Britain. Gold benefits from a number of things; one of them is volatility in risky assets such as stocks, currencies and commodities. QAU was up by more than 2.5% by 12.51pm AEST, while the ASX was down by a similar amount.

What will happen by the end of the count is unknowable at this point. However, we already know what will likely happen — volatility. If ‘Bremain’ takes over eventually, Britain will remain in the European Union as widely expected. That will perhaps bring gold back down and give back the losses in the stocks.

If the Brits really choose to leave the European Union, then more volatility will enter the equation. There will be a lot of action across currency markets, and other markets, as a response. In that case, gold could gain further.

What now for QAU?

No, I don’t have a crystal ball. Guess what, nobody has. Despite that, it is my belief that the stock market would recover next week if Brexit materialises.

If nothing dramatic happens after Brexit (which is always a possibility), there will be no reason for Aussie stocks to be punished.

However, I do anticipate a ‘Brexit’ to have medium to long term ramifications for the Eurozone. Will that reward QAU? If there is an unclear destabilising effect on the Eurozone, then you should anticipate QAU to gain more from those uncertainties.

Ken Wangdong
Emerging Market Analyst, New Frontier Investor

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