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“Brexit” has become a reality. Now what? That is the question being asked by investors around the globe following the historic vote by the people of Great Britain.

 

Things took a dramatic turn late last week from the recent optimism being expressed by investors. Heading into Thursday’s vote, it seemed the “remain” camp had a distinct edge and the U.K. would remain a member of the European Union.

 

Things started heading south quickly on Thursday night as the tallying process got into full swing. Global markets were paying close attention as the results started being compiled, and significant volatility was seen in stock index futures, interest rates, currencies and other markets.

 

At one point Thursday night, the broad market S&P 500 futures contract went “limit down” and trading was halted. The British Pound was heavily punished as well, hitting its lowest level seen in over 30 years at one point. Interest rates fell and crude oil was sold off.

 

Gold and silver, on the other hand, saw heavy buying.

 

By the time the dust had settled in the U.S. on Friday, the S&P 500 had lost over 3.5 percent, the Dow Jones declined by 3.39 percent and the Nasdaq shed well over four percent. Crude oil lost over five percent while the British Pound was slammed for a decline of nearly eight percent (well off of the session lows).

 

Carnage- complete and total carnage- is really the only way to describe much of the price action seen in markets on Friday.

 

The immediate question now is: Is the worst of it over?

 

Probably not…

 

The fear of the unknown is a powerful thing, and the uncertainty surrounding the implications of Brexit are far-reaching. The reality is that no one can say for sure just how this will affect global financial markets. The potential “ripple” effect is already being seen as Scotland is reportedly revamping efforts for an independence referendum.

 

Who will replace British Prime Minister David Cameron?

 

How will the Brexit affect U.S and Canadian businesses in Europe?

 

Will this weaken the European Union?

 

These are just a few of the major questions that investors will be complicating. Unfortunately, the answers to these questions may not come as quickly as many hope.

 

The hard truth is that this process will not take weeks or months, but several years.

 

In the meantime, it is impossible to say just what effects this historic vote will have on the global economy.

 

One thing is for sure, though, and that is that the vote will leave a number of unanswered questions and may add considerable uncertainty to global markets.

 

Investors don’t like unknowns and they don’t like uncertainty.

 

Just look how quickly investors dumped stocks and risk assets and sought the perceived safety of treasuries and gold.

 

Gold saw gains of nearly 4.7 percent on Friday, while silver rose over 2.5 percent.

 

This week could potentially see more panic selling as investors try to gauge the ramifications of the Brexit vote and stocks may remain under pressure as Brexit overshadows any economic optimism. Oil and other risk assets may also see further selling, while treasury yields are likely to remain on the lower side of the ledger.

 

Who knows just how far the British Pound may fall….

 

Gold appears headed for higher ground as investors may seek out alternative assets in which to put capital to work. An increase in market volatility could potentially drive flight to safety buying in the yellow metal, and a significant leg higher in gold could be in the cards.