More Signs of an EU Breakup?

Think right now with rising stocks, rising interest rates, better economic data and a more hawkish Fed that there isn’t good reason to own gold?

Think again…

Spreads on Credit Default Swaps, or CDS, are rising for some EU countries. This would seemingly indicate that traders and investors may be getting more nervous about a potential breakup of the union, or of a key country deciding to leave as Great Britain did. A rise in these swaps simply means that more insurance is being purchased to guard against a credit event.

There is a Dutch election next week and a Presidential vote in France next month. Italy could potentially hold snap elections over the summer. Any way you slice it, the next few months could potentially dictate the future of the EU.

Although Great Britain making the decision to leave the union has thus far not had the effects that many thought it might have, a key member of the EU like France deciding to leave could potentially spell the end of the union.

This could potentially cause a whole cascade of negative credit events and significant market volatility.

Marine Le Pen, the leader of France’s populist National Front party, has already said she’d leave the EU if elected.

Obviously, this could be a major issue for bond prices, which could be hit hard as rates rise. France would once again issue its own currency, and seek to devalue it to boost exports and the economy.

The country would also redenominate its debt using the new currency. The country could also potentially print money as necessary to lower its debt load. Investors could potentially lose a great deal of money in the process.

If rates really spiked, countries could be left with no choice but to turn on the printing presses to keep borrowing costs reasonable and governments running. Currency values could decline, along with wealth and purchasing power.

This is exactly why you need to consider physical gold as part of your overall portfolio strategy.

Gold has been considered a reliable store of value for thousands of years. It carries no counterparty risk and may potentially provide a meaningful hedge against a number of economic and geopolitical issues like inflation, declining currency values and a loss of purchasing power. Gold can also potentially provide further portfolio diversification.

If you don’t currently own physical gold as part of your portfolio, now may be the ideal time to consider an allocation.

Adding physical gold to your holdings has never been easier. Speak with an Advantage Gold account executive today about the potential benefits of physical gold ownership. Our associates are here to answer any questions you may have, and can even show you how to buy and hold physical gold using your IRA account.

Don’t wait for the next major “credit event” or stock market crash before taking action. Explore your options for physical gold ownership. Call Advantage Gold at 1-800-341-8584 to get started today.

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