It’s safe to say that those who’ve been watching the gold price over the last few months haven’t exactly had the ride of their life. For the best part of a year now, the gold price has barely moved, and volatility sits at its lowest point in some time.

It’d be fairly easy at this point to cash everything in, say that gold’s had its day and decide that now’s the time to move your money elsewhere. To do so, however, would be remarkably short sighted and would fail to account for the nature of gold as a commodity and the reasons it’s remained so constant for so long.

Let’s take a moment to have a look at these reasons.

Gold and volatility

To be fair, gold has never been famous for its volatility. If risk and thrills are what you’re looking for – then platinum and palladium are where your money wants to be. Gold generally moves incrementally against inflation, remains constant for a long time and springs up in times of political economic uncertainty.

While we’ve (as of yet) not experienced any significant economic uncertainty since the recession – there’s been plenty of political uncertainty. So you’d certainly expect gold to be doing a lot more than it is. We spoke about this back when Kim Jong-Un and Donald Trump dominated the headlines some weeks ago.

The thing is, over the past few years, we’ve been pretty much saturated with political uncertainty. Brexit, Trump, Catalonia, the Refugee Crisis, the Eurozone Crisis… the list continues. And that’s before we’ve even started on North Korea. 

Gold’s ability to act as a safe haven currency remains strong. But in an era when political crises occur every other week, investors have become somewhat immune to the panic. It’s going to take something more than a quibble between world leaders to make the gold price soar.

Another economic crisis would probably do the trick quite nicely. But let’s not wish for another one of those any time soon.

The Brexit factor

That being said, whatever we wish, there’s a good chance that Brexit will have more of a say in the gold price over the next few months.

Gone are the days of endless stalemate, deadlock and uncertainty. Just this last weekend the cabinet met and pulled together, after two years of dithering, something that looks like a plan. It’s not without its controversy, as the resignation of two leading cabinet ministers proved.

For better or for worse, however, this proposal from the Prime Minister will act as a catalyst for the markets – in whatever direction they choose to move. We might continue trading with the EU on broadly the same terms, or we might crash out with no deal and risk significant economic uncertainty. Either way, we’re probably going to find out about it pretty soon.

What does this mean for gold?

The period of gold’s low volatility correlates roughly with the length of time the government has been negotiating Brexit. The issue is so all-encompassing, yet has been so uncertain for so long, that it seems to have locked the gold price in place and made it much harder for any other external factor to make any tangible impact. It wouldn’t exactly be the first time Brexit has had that effect.

There are two main options for what will happen now. The first is, the deal, or some fudge-based variation thereof, passes both parliament and the EU. Big if. We’d probably avoid large scale economic collapse in that instance, and continue trading on similar terms during the transition period. In that instance, gold would potentially return to its pre-2016 levels of volatility. 

The second is if we collapse out in March 2019. The uncertainty in that situation would almost certainly trigger a spike in gold’s value – perhaps one even as significant as that seen after the original referendum in June 2016.

If that happens, there’s a good chance that other assets in your portfolio, cash assets stocks, shares and real estate, could quickly start to lose value. If they do, you’re certainly going to wish you’d bought gold back in July 2018 when it was cheap.

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