Unlike paper currency, Gold is real money.
Gold is also referred to as “chaos insurance”.
You see, when investors feel nervous and uncertain, they usually shift their money out of risky assets and into the safety of gold.
Right now gold is just under $1300.
But there is one word – or one event I should say – which could send gold prices surging higher to $1400 very quickly.
On Thursday 23rd June, the British people are going to decide whether they wish to leave the European Union or remain.
The decision to exit the EU is also called “Brexit”.
Recent polls from the Financial Times newspaper have shown that the “Leave” campaign has a 10 point lead.
Of course, nobody really knows right now what the real outcome of the UK referendum vote will be on June 23rd.
However, we strongly believe that if the result of the vote is Brexit, this will hugely benefit gold and mining stocks.
Whatever your views are about Britain leaving or remaining in the EU, there is no doubt that a Brexit vote will be an enormously important event – and it will deliver a shock to global markets.
History has shown that in moments of uncertainty or unexpected events, gold has often benefited.
For example, when the second Gulf War started in March 2003, gold rallied 34% by the end of the year!
Let’s take a look at the chart of gold right now:
Two weeks ago I told my premium members that gold’s breakout move on June 3rd was a very positive signal for the metal.
Here’s what I wrote to members at the time:
“This is a statistically significant breakout, and a bullish move for both gold and gold stocks… the smart money believes that the Fed will NOT be raising rates any time soon and that deflation is still a threat. This helps both gold and bonds.”
As we had expected, both gold and bonds have rallied strongly since I wrote that 12 days ago.
Right now gold is just below resistance at 1300 and above support at the 1250-1200 level.
As long as we can stay above the support level, there is a strong chance this rally could continue.
If gold can break 1300 and close above it, there isn’t much resistance until 1375 and then 1417.
Again, a lot depends on the outcome of the UK referendum vote next week.
If Brexit happens… watch gold and be prepared for its move.
Alessio Rastani is a stock market trader at www.leadingtrader.com