The EU’s Internal Strife Sets the Stage for Gold
As much as authorities in Brussels would like to pretend that the EU is as united as ever, major fissures have erupted over the past several years as EU authorities continue their quest to unify the continent. While previous discontent was largely confined to smaller and more peripheral members, the latest feuds are starting to involve disputes between and among core members of the European project.
Italy has become a flash point for conflict, both as a result of its strong anti-immigration policies and its loose fiscal policies. That has led to a feud not only between Rome and Brussels, but also between Rome and Paris. And with the prospect of even more bad blood between Italian and European officials, the risk that the EU could come off the rails continues to grow.
Continued political and economic turmoil in Europe helped to drive up gold demand in Europe in 2018. And with Brexit still unresolved, Germany’s economy headed towards recession, and Italy threatening to relaunch its own currency, all the factors are there to result in greatly increased gold demand in the future.
Things aren’t too much better on our side of the pond, with factory activity slowing, farmers having their worst year in decades, and the Federal Reserve expected to embark upon further monetary easing in the near future. Add into the mix the trade war with China, tariffs against India, and the possibility of tariffs against the EU, Mexico, and Turkey, and you have a recipe for major disturbances to world trade.
While no one wants to see the economy enter into a tailspin, that’s the unfortunate result of over a decade of loose and expansionary monetary policy. The bubbles that have been blown are now about to burst, with all of the negative consequences that will result.
Thankfully for investors there are ways to protect their assets against those bursting bubbles, and gold is right at the top of that list. Investors who flocked to gold during the last financial crisis saw their assets protected while others lost over half of their wealth. With the next crisis set to make 2008 look like child’s play, can you afford not to invest in gold today?