London gold dealers report surge in coin, bar demand on Brexit vote

(June 27, 2016 - by Jan Harvey)

* Sterling-priced gold posts double-digit percentage gains

* Investors buying sovereigns, Britannias, kilobars

Gold dealers in London reported surging demand for coins and bars on Friday, with some saying stocks were tight, after a shock vote for Britain to leave the European Union sent financial markets into meltdown and drove the pound lower.

Gold delivered double-digit percentage gains in sterling terms on Friday, topping 1,000 pounds an ounce for the first time in over three years, and soared as much as 8 percent in dollars.

Volatility in the wider markets has left some retail investors scrambling to stock up on gold, dealers say.

"We’ve already got queues forming," said Tony Dobra, executive director of bullion merchants Baird & Co, which has an outlet in London’s Hatton Garden. "Sovereigns seem to be the most favoured at the moment."

Mark O’Byrne, research director of Dublin-based gold broker Goldcore, said it had seen record online sales for the time of day in early trade.

Sales of Britannia and sovereign coins have been extremely high, and inventories are being replenished, he said.

The Royal Mint said visitor numbers to its bullion trading platform had surged by 550 percent from Thursday, while new account openings had trebled.

Ross Norman, chief executive of Sharps Pixley, said his company had also seen a surge of online business on Friday, with gold Britannia coins and kilo bars selling out.

"We’ve been forced to get emergency stocks from our German and Swiss offices," he said. "Gold is demonstrating well what it does best, which is wealth preservation."

Users of online gold retailer BullionVault users traded 23.5 million pounds ($32.20 million) worth of vaulted gold and silver between midnight and 1000 GMT, it said, more than two weeks’ worth of average trading in 2015.

Gold sales in London picked up earlier this month after polls first began to suggest that the Leave campaign had edged into the lead.

Physical gold demand among consumers is also expected to rise in the remainder of the EU, on fears that other countries could also seek referendums on exiting the bloc.

Gold priced in euros hit a three-year high on Friday as the single currency dropped sharply versus the dollar.

"We’ve already seen quite a surge in online demand," German bullion retailer Degussa’s chief executive Wolfgang Wrzesniok-Rossbach said. "We’ve had double the number of purchases compared to a normal day."

Dealers are also reporting selling as some investors cashed in gains after gold rallied to three-year highs in euro and sterling terms overnight, although they say that activity has dried up as prices retreated from those peaks.

"The buying side is much, much bigger than the selling side," Daniel Marburger, director of CoinInvest.com, said. "I would estimate that we have one seller to every fifty buyers." The company had had a big uplift in sales on Friday, he said. ($1 = 0.7299 pounds).