JOHANNESBURG (miningweekly.com) – With Britain voting to exit the European Union (EU), the World Gold Council expects to see strong and sustained inflows into the gold market driven by the "staggering" level of protracted uncertainty that investors now face.

The council said on Friday that gold’s surge to $1 313.85/oz was providing investors with a much-needed safe haven.

At the same time, the British pound had fallen to a 31-year low and world equity markets had plummeted.

Sharps Pixley saw its busiest day ever with online sales draining stocks of larger bullion bars and prompting the gold trader to call on emergency reserves of kilobars from Germany.

Its stocks of many coins had also been bought out.

Sharps Pixley CEO Ross Norman emphasised gold’s wealth preservation properties and said the precious metal was protecting investors against currency weakness and political uncertainty.

The Bank of England was standing ready to take whatever action was necessary, a mantra likely to be repeated by other central banks.

Interest rates were expected move further into negative territory, which would be another positive for gold, the World Gold Council said in its release to Creamer Media’s Mining Weekly Online.

Central bank action had already capped the gain in other safe haven assets, with the Swiss National Bank already engaging in currency market intervention to protect the Swiss franc.

“It’s difficult to find an event to compare,” the council commented, adding that while blocs had broken before, none had been as important to the global economy as Europe.

The UK domestic, European and world implications were profound in what would not likely be a quick process.

Once Article 50 of the Treaty on the European Union had been invoked, a two-year negotiation process would begin.

In the meantime, the UK’s decision could trigger referendums in other European countries, against the background of Scotland’s unequivocal vote to remain in the EU.

Northern Ireland and the Republic of Ireland were on the point of beginning emergency talks with the UK and EU to manage the border situation.

The Brexit result could also spur populist parties in countries such as France and Germany, where elections were due next year.

The World Gold Council said that gold was fulfilling its classic role as a safe haven asset and performing exactly as the many investors that bought it in the run up to the referendum would have hoped.

“We expect to see strong and sustained inflows into the gold market driven by the intense market uncertainty that now faces the global markets,” the council added.

Gold exchange traded fund holdings were expected to accelerate, as both retail and institutional investors switched investment allocations to gold.

Purchases of gold coins by small retail investors were already up sharply in the months running up to the vote and central bank actions would increase gold’s attractiveness when compared with other safe haven assets.

While the Swiss National Bank had to halt the rapid appreciation of the Swiss franc, gold was unique in that it did not carry intervention risk, and was poised to provide investors with a hedge against market uncertainty, economic, political and intervention risk, the council added.