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Gold Surges to Highest Since ‘14 as BBC Predicts Vote for Brexit

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Gold Bars

Gold surged to the highest level in more than two years in a frantic global hunt for haven assets as Britain’s voters were projected to back leaving the European Union after a historic poll.

Bullion for immediate delivery jumped as much as 8.1 percent to $1,358.54 an ounce, the highest price since March 2014, and traded at $1,328.90 at 5:09 a.m. in London, according to Bloomberg generic pricing. The rally was the biggest daily jump since 2008, setting off a surge in shares of gold producers.

“Gold will be a preferred safe-haven asset with a ‘Leave’ vote,” said Barnabas Gan, an economist at Singapore-based Oversea-Chinese Banking Corp, who forecast that it could rally to as much as $1,400 if ‘Remain’ loses. Bullion’s expected to remain volatile until the final verdict is out, according to Gan.

Bullion powered ahead amid turmoil in global financial markets as the pound was driven the lowest level in more than three decades, equities tanked and investors fled from risky assets. As figures from local counts came in on Friday, BBC News predicted that the ‘Leave’ camp would win, following similar calls from JPMorgan Chase & Co. and ITV News. With 306 of 382 areas declared, ‘Leave’ had 12.9 million votes, while ‘Remain’ was at 12.1 million.

‘Lot Stronger’

“As the votes have started to be announced, it seems more and more that the ‘Leave’ vote is a lot stronger than expected,” said David Govett, head of precious metals at Marex Spectron Group Ltd., a broker in London. “Gold is essentially following sterling, albeit in the opposite direction.”

Priced in sterling, bullion advanced to more than 1,000 pounds an ounce after rising 18.5 percent. Among miners, Newcrest Mining Ltd., Australia’s biggest producer, advanced as much as 8 percent to the highest level since February 2013 as Evolution Mining Ltd. surged 19 percent.

Societe Generale SA predicted whatever decision is reached in the U.K. on its ties with the world’s largest trading bloc, volatility in bullion should increase. The bank recommended investors buy a so-called gold-variance swap, which gains in value as volatility increases. A decision to leave may lift prices to as much as $1,400, it said in a note this week.

While bullion prices have declined ahead of Britain’s landmark referendum, holdings in exchange-traded funds have kept expanding. The assets were little changed at 1,904.3 metric tons on Wednesday after rising for 16 days to the highest level since October 2013, according to data compiled by Bloomberg.

Until the nationwide result in Britain is finally out “it could be a volatile day for gold, particularly if it looks like it will be a close outcome,” said Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors Ltd., which oversees about $116 billion.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Crude Oil

Oil Holds Near Highest Since 2018 With Global Markets Tightening

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Crude Oil - Investors King

Oil held steady near the highest close since 2018, with the global energy crunch set to increase demand for crude as stockpiles fall from the U.S. to China.

Futures in London headed for a third weekly gain. Global onshore crude stocks sank by almost 21 million barrels last week, led by China, according to data analytics firm Kayrros, while U.S. inventories are near a three-year low. The surge in natural gas prices is expected to force some consumers to switch to oil, tightening the market further ahead of the northern hemisphere winter.

China on Friday sold oil to Hengli Petrochemical Co. and a unit of PetroChina Co. in the first auction of crude from its strategic reserves said traders with the knowledge of the matter. Grades sold included Oman, Upper Zakum and Forties.

Oil has rallied recently after a period of Covid-induced demand uncertainty, with some of the world’s largest traders and banks predicting prices may climb further amid the energy crisis. Global crude consumption could rise by an additional 370,000 barrels a day if natural gas costs stay high, according to the Organization of Petroleum Exporting Countries.

“Underpinning the latest bout of price strength is a tightening supply backdrop,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd.

Various underlying oil market gauges are also pointing to a strengthening market. The key spread between Brent futures for December and a year later is near $7, the strongest since 2019. That’s a sign traders are positive about the market outlook.

At the same time, the premium options traders are paying for bearish put options is the smallest since January 2020, another indication that traders are less concerned about a pullback in prices.

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Energy

Unlocking Investments into Africa’s Renewable Energy Market

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green energy - Investors King

The African Energy Guarantee Facility (AEGF) is launching a virtual roadshow of free webinars allowing a deeper understanding of risk issues for renewable energy projects on the continent, and conversations around risk mitigation solutions. The first webinar will take place on Thursday, 23 September from 14:30-16:00 hrs. EAT. 

The session will be oriented on how to get more energy projects from the drawing board to the grid. While the energy demand in African economies is expected to nearly double by 2040, and although the potential for renewable energy is 1,000 times larger than the demand, only 2GW out of almost 180GW of this new renewable power were added on the African continent.

Clearly not good enough! To improve the situation within the next two decades, new solutions need to be implemented urgently. De-risking and promoting private sector investments will play a crucial part of it.

In this 90-min interactive session, AEGF partners: the European Investment Bank (EIB), KfW Development Bank, Munich Re and the African Trade Insurance Agency (ATI) will share their experience and provide valuable insights on how they were able to come together and design practical solutions for investors and financiers of green energy projects in Africa aligned with SDG7 objectives.

Across Africa, the complexity of renewable energy projects and their long tenors hold back crucial energy investment. Tailored to the specific needs and risk profiles of sustain­able energy projects, AEGF will tackle the investment challenge by providing underwriting expertise and capacity tailored to market needs.

The AEGF will significantly boost private investment in sustainable energy projects, both expanding access to clean energy and contribute to achieving UN Sustainable Development Goals. The scheme supports new private sector investment in eligible renewable energy, energy efficiency and energy access projects in sub-Saharan Africa.

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Energy

Shell Signs Agreement To Sell Permian Interest For $9.5B to ConocoPhillips

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Shell profit drops 44 percent

Shell Enterprises LLC, a subsidiary of Royal Dutch Shell plc, has reached an agreement for the sale of its Permian business to ConocoPhillips, a leading shales developer in the basin, for $9.5 billion in cash. The transaction will transfer all of Shell’s interest in the Permian to ConocoPhillips, subject to regulatory approvals.

“After reviewing multiple strategies and portfolio options for our Permian assets, this transaction with ConocoPhillips emerged as a very compelling value proposition,” said Wael Sawan, Upstream Director. “This decision once again reflects our focus on value over volumes as well as disciplined stewardship of capital. This transaction, made possible by the Permian team’s outstanding operational performance, provides excellent value to our shareholders through accelerating cash delivery and additional distributions.”

Shell’s Upstream business plays a critical role in the Powering Progress strategy through a more focused, competitive and resilient portfolio that provides the energy the world needs today whilst funding shareholder distributions as well as the energy transition.

The cash proceeds from this transaction will be used to fund $7 billion in additional shareholder distributions after closing, with the remainder used for further strengthening of the balance sheet. These distributions will be in addition to our shareholder distributions in the range of 20-30 percent of cash flow from operations. The effective date of the transaction is July 1, 2021 with closing expected in Q4 2021.

Shell has been providing energy to U.S. customers for more than 100 years and plans to remain an energy leader in the country for decades to come.

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