The UK joined in the first wave of European Union (EU) expansion in 1973. Today the EU has 28 member states, including 500 million people and a GDP of US$16.2 trillion. The EU is the United Kingdom’s (UK’s) biggest trading partner. On June 23rd the UK voted 51.9% (Brexit or British Exit) to turn its back on the EU, sending tremors across Europe and triggering financial market turmoil across the globe. It was a moment of an extraordinary political cataclysm that also deposed its prime minister, sank its currency and reopened the possibility of Scottish independence. Markets were caught completely off-guard as the first voting results landed. In a frantic day of reactionary trading, the pound plummeted to a 31-year low against the US$ and the FTSE 100 slumped by as much as 8.7%. Outside of Europe, the Dow Jones Industrial Average dropped initially by more than 400, but pared losses to end the day 3% lower. The Japanese benchmark Nikkei 225 also closed down7.9%. The commodities market also felt the impact of Brexit. Prices of growth-related commodities such as oil and copper tumbled the day after the vote as investors decided to sell and move to safer havens such as gold and the yen. “During the two years in which the UK will have to renegotiate its trade relations with the EU, Moody’s expects heightened uncertainty, diminished confidence and lower spending and investment to result in weaker growth,” the rating agency said. Moody’s rates the UK at Aa1, having stripped it of its top-notch Aaa rating in 2013. Mainland Europe does not have a competitor to the London Metal Exchange (LME), which plays a pivotal role in setting global metal prices. On the demand side of the equation, it is China, not Europe, that is the world’s biggest consumer of metals and sets the pace for supply and demand and ultimately, the price for mined commodities. As for base metals pricing, there is little expectation of a lasting impact from the Brexit vote and commodity investors aren’t letting the shock of Brexit spoil their best three months since 2010. While the UK’s Brexit vote temporarily whipsawed markets, “Investors are now shrugging off the impact as the market has already priced it in,” Will Yun, a commodities analyst at Hyundai Futures Corp., said. “With the oversupply largely shrinking, the market is on the path of re-balancing as the worst seems to be over for now and we’ve hit the bottom.” Following Brexit, gold prices soared the most in eight years as the metal holds a value as a safe haven. As of last Friday, the price held onto gains, closing at US$1344.70/oz. Gold stocks have followed gold prices with significant gains; some companies, such as Anglo Gold and Goldfields, are benefitting from a “Brexit double whammy” with both improved price and reduced costs from depreciated local currencies in production locations. Base metals and oil fared less well initially but have now recovered lost ground with copper at a seven-week high and oil trading on Friday within cents of US$50 barrel. The Brexit vote brought short-term turmoil to the market, hopefully a bump in the road, but may have also introduced a longer-term and perhaps lasting drop in the value of the UK £, which was at US$1.33 on Friday. Copper appears to be holding onto gains after a reactionary sell-off immediately following Brexit. Now, at US$2.22/lb., it is back on a strong recovery track, joined in the rally by most other LME industrial metals. (Written by Peter Jones, Executive Vice President, Century Global Commodities Corporation)