Britain’s Brexit problems are vividly reflected in a soaring sterling price for .
In what amounts to a near 5% devaluation of the pound against the yellow metal during the past month, the cost of an ounce of gold has soared since 12 November from just over £939 to more than £983 this morning.
Gold is priced in on world markets, which means its value is affected by the strength, or otherwise, of the US currency.
This morning, it was 0.28% lower at $1,248.25. Put another way, the dollar strengthened a little against its chief rival as a safe-haven asset in times of trouble.
But over the longer term, the trend has been for the pound to lose value in bullion terms. Three months ago, on 11 September, an ounce of gold cost just £916.763, while three years ago, on 15 December 2015, the sterling price of gold was £701.609.
Put another way, there has been gold-price inflation in British currency terms of 40% during the last three years. Over the same period, the dollar bullion price has risen by about 19%, from just over $1,055 an ounce.
Level of panic
Part of the surging sterling cost has been triggered by rising demand from traders and investors spooked by both the tortuous Brexit process and the possibility of a constitutional crisis in the UK, traditionally one of the most stable political entities in the world.
According to The Pure Gold Company, Mrs May’s decision on Monday to postpone a vote on Brexit in the House of Commons that she could not win triggered a huge rise in sales of physical gold bars and coins.
In one sense, sterling’s loss of value against gold is simply another type of inflation, no different from a rise in the price of groceries or residential homes. But the relationship between bullion and national is complicated by the fact that gold is a monetary asset in its own right, and is the only one against which all other currencies can rise or fall together – in every other case, one currency’s gain is another’s loss.