In previous article we discussed how stock indexes throughout the world reacted to results of referendum. Plunging stocks, pound and oil evoked panic among investors who started to sell off their holdings.
Still, there are assets which soared after results were made public, and people, who possibly made tons of money out of it, or at least by hedging against this scenario they were able to cover their losses from other positions.
If we had believed the Brexit would happen, we could have profited from that either by shorting stocks of banks, practically all major world stock indexes or betting against the British pound. As we mentioned above, some assets gained and therefore speculating on their rise would result in hefty profits as well.
One of the assets most expected to rise in value was gold, which jumped 4,69% to 1 322,40 dollars per ounce. Last time it was traded at these levels was two years ago.
Another commodity that gained was silver, rising 2,50% to 17,79 dollars per ounce, levels lastly seen a year ago.
Not surprisingly, stocks that led the gains were gold miners. Among top performers were Randgold Resources Ltd and Fresnillo Plc, rising 14,18% and 11,86% respectively. Index tracking gold miners, the MSCI ACWI Select Gold Miners Index, rose 6%, reaching highest levels since March 2014.
Another group of companies that rose were big UK exporters with most of their revenues coming from outside of UK. Stocks of these companies, we can mention Compass Group Plc and British American Tobacco Plc, were boosted by weakening pound and at the end of trading session closed about 2,6% higher.
As expected, currencies that soared were Japanese yen and Swiss franc, traditional safe havens.
On the chart below, we can see that yen strengthened against pound more than 11%.
Swiss francs strengthened against pound about 7%, and lastly it was traded at these levels was about year and a half ago.
We´ve just seen that there are assets that rise in value when the panic comes. Investing in them could be a good hedge if we want to protect our investments vulnerable to events similar to Brexit, or if we just want to speculate on them, when being right about future comes with big reward.