The Brexit, Concern Over EU Stability, and Trade Deals Increases Safe Haven Gold Investing
Economic uncertainty in the European Union continues to drive safe haven gold investment in Europe after a failed referendum on EU-Ukraine trade relations. Concern over Great Britain’s upcoming referendum on EU membership (set to take place in June) is also straining the markets. If the Brexit were to occur, it would likely spell the eventual demise of the European Union as an institution and set a prerogative for further member state exits. The Fed announced that the implications of a Brexit would be discussed at length in its next meeting. You may have already heard about the Brexit, but if you have not, now you have. This should continue to build momentum in the news as we approach June 23rd. This date is significant because it is the day the referendum will be held to vote whether Great Britain stays or exits the EU, hence the portmanteau “Brexit”.
Why this matters to gold investors: The risks and uncertainty driving concerned Europeans towards gold are not exclusive to Europe and will have global repercussions. As a predominantly economic union, an EU where member states begin severing ties would have a plethora of dire ramifications. For thousands of years gold has been intrinsically valued as an indicator of wealth, and as this rush to safe haven gold shows, now is no different. Investing now is a guaranteed way of ensuring wealth preservation in a turbulent future. Britain leaving the EU would create quite a ripple effect, and the haven from that wave will be and always has been gold and silver hedges. I encourage clients and prospective investors to speak to our guys about this. There is so much brewing in the global economy that we all need to be aware of. This was covered at our latest seminar at KTAR studios, and really opened many eyes in the room. There is a great manipulation going on in the bond markets that will eventual lead us all running to obtain gold, but if the Brexit occurs, it would most certainly accelerate the tailspin of the EU’s stability. This event would propel both the demand and price of gold significantly. Take a few minutes to find out more by calling your broker here at 602.955.6500.
Gold Gains Most in a Week on Fed Caution
On Wednesday, gold saw the most gains this week following the release of the minutes from the Fed meeting in March to discuss lowering interest rates. The question of whether the Fed would pursue a cautionary monetary policy has been much discussed in previous weeks, so this release was significant in solidifying the Fed’s dovish outlook. The cautionary policy discussed and decision to keep interest rates low was positive for gold’s competitiveness against interest-bearing assets. Global economic risks and uncertainty were the key factors that influenced Fed caution.
Why this matters to gold investors: Gold has climbed 17 percent this year as the dollar declined. In March gold went through a corrective phase, which it appears to have now broken through and will continue to do through the year. Gold historically performs well when interest rates fall, as the Fed as reported they will.
Gold Looks Poised to Resume Rally
After Thursday’s rally, gold dipped slightly on Friday as world stock markets were stronger and oil prices rose higher. However, indicators point to gold having broken through its recent short-term corrective trend to continue its upward trajectory. The dollar’s volatility will continue to influence gold’s direction, and the dollar has been showing growing instability. The dollar has also been falling against the Euro and will likely continue to do so under the European Central Bank’s monetary precautions.
Why this matters to gold investors: With such positive projections on the horizon for gold, now is an optimal time to take of advantage of the recent market correction and invest. The correction has lent stability to gold prices, which are likely to continue to rally through the year.
Here are some articles from the web discussing the topics in this week’s post:
Gold Rallies During the Week after More News from the Fed
Concern over European Union Stability and Trade Deals Increases Safe Haven Gold Investing
Gold Looks Poised to Resume Rally
Investopedia “Brexit” Page
As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at 602-955-6500 or toll-free at 877-354-4040.