The first round of the French presidential election takes place this Sunday, April 23… and the future of the European Union depends on the outcome.
Establishment candidate Emanuel Macron leads in the polls, but Marine Le Pen, leader of the far-right Front National is trailing him by only 1%. However, the real story of the past month has been the rise of far-left candidate Jean-Luc Mélenchon.
In the latest polls, Mélenchon sits only 4% behind the leader—and if we learned anything from Brexit and the US election, it’s that polls can be “slightly off.”
France has a two-round election process, where the two candidates who receive the most votes make it to a final showdown. It’s quite possible Le Pen and Mélenchon, both of whom are running on an anti-EU platform, could lock up the two spots.
Why should you care about French politics? Here’s why…
To quote Mark Twain, “History doesn’t repeat itself, but it does rhyme.”
If one (or both) anti-EU candidates make it through the first round, gold could have a “Brexit rerun.” To refresh your memory, following Brexit last June, the price of gold jumped almost 8% in just two weeks.
As France is Europe’s second-largest economy and a critical piece of the EU puzzle, the implications of an anti-EU candidate winning are severe. As such, gold’s Brexit move would likely be amplified.
Even if only one of the anti-EU candidates makes it through to the second round, it will create uncertainty and fear—both of which lend themselves to a higher gold price.
Also, the French election has lots of upside, but little downside for gold. If an establishment candidate wins, the gold price is unlikely to be hurt. However, if an outsider wins, gold could skyrocket… à la Brexit.
For those who missed the opportunity to buy gold at a pre-Brexit discount, now is your second crack of the whip.
Besides owning gold for its potential upside, you should also own it for protection.
The EU is the second-largest economy in the world behind the US. Therefore, its collapse would likely trigger a global financial crisis.
Sovereigns will default, banks will fail… there will be economic and social chaos.
The takeaway: you don’t want your savings caught up in this mess.
A time-tested method used to insulate wealth from disasters such as this is to own gold bullion.
Those with their savings in the banking system or invested in the markets would face a total wipeout. On the other hand, those who have a portion of their funds in gold will be protected.
With the EU fragmenting, now is an excellent time to add gold to your portfolio. Buying physical gold will offer you both protection from the potential collapse... and the chance to profit from Brussels’ demise.
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