While Brexit is negotiating the terms of Great Britain’s trade relations and internal politics, the people of Europe have begun hedging their bets regarding the economic fallout. Most people, especially outside of Great Britain, see Brexit as an economic drag on the global economy. This sentiment is gaining traction in Great Britain as well. Many economists are pumping the brakes on doom predictions, but some of this is to avoid a panic.
Financial panics are what caused the Great Depression nearly a century ago. When confidence in the bank’s holdings in the1920s sank, a run on the banks ultimately resulted in the great depression. People rushed to the banks demanding cash. When confidence in particular currencies or institutions is lost people often shift their holdings to more conservative assets often cash or gold.
The dollar will certainly be strengthened against the Sterling Pound post-Brexit, because it is still considered the global standard and gold tends to have value even if current events cause it to fluctuate. Cash usually holds value even when it is fluctuating or sinking. However, in today’s economy, confidence, shocks and panics still move money and the post-Brexit fallout in the financial sector is magnifying