This past week saw the French become the most recent example of the ongoing meltdown in post-World War II political parties. For the first time in the history of the French Fifth Republic, the two main parties of socialists and conservatives were eliminated from the final round of the presidential contest.
The results of the April 23rd historic first round vote saw an independent candidate who started his own party only a year ago– Emmanuel Macron– emerge to battle it out with the powerful far right nationalist leader Marine Le Pen in what promises to be a close and hard fought contest that culminates on May 7th.
Meanwhile, in the ongoing Brexit saga across the channel, British Prime Minister Theresa May called for shocking snap elections on June 8th. Within a few days, German Premier Angela Merkel showed how tough she will be on the U.K. in the upcoming Brexit negotiations in a speech she gave before the German parliament.
Even as Vice President Mike Pence was busy on the start of his 10 day tour of Southeast Asian allies of the United States starting with Japan and South Korea, President Trump’s administration back home began working up an executive order to withdraw the United States from the three decades old NAFTA treaty with Canada and Mexico. Though such an order has not yet been officially issued, Mexican sovereign debt insurance costs are already rising dramatically as market fears mount.
The geopolitical events of the world continue to remind you of the reasons that you must protect your investment and retirement portfolios with precious metals. Now would be a good time to learn how to invest in Gold— the best insurance and hedge against the increasingly unpredictable political landscape that could derail financial markets around the globe at any time.
France Becomes the Latest Example of Meltdown in European Political Parties
The first round of the French presidential election occurred this past weekend on April 23rd. When the dust settled, mainstream political outsiders Emmanuel Macron and Marine Le Pen had crushed the two main parties of the past 60 years in post-Second World War France. The defeat of the French left and right is only the latest in a series of triumphs of European populism which have been compared by Kings College London Politics lecturer Edoardo Bressanelli to the political earthquakes brought on by the era of industrialization over 200 years ago.
Though the early polls have consistently shown that independent candidate Macron will beat far right anti-European Union and French nationalist candidate Marine Le Pen, this result is not at all guaranteed. The weakness in Macron as an inexperienced candidate who has never held elected office in France before was on display for the world as he stood outside of an imminent to close plant owned by Whirlpool Corporation. The factory was in a town close to his own home town Amiens in Northern France.
Instead of this being a hometown crowd, angry protestors from the factory who are soon to be unemployed surrounded him and shouted him down in front of international television cameras. Macron struggled to get across his message to the mob-like swarm as tires burned in the background and the crowd booed and whistled at him in a scene reminiscent of something out of the French Revolution with:
“I’m not the left, I’m not the right… If Madame Le Pen is elected, this company closes. And I can mention dozens like it. Le Pen’s project will fix nothing of the Whirlpool problem, nothing… We cannot outlaw firing. We must fight to find a buyer.”
This set up Macron’s rival Le Pen for an easy shot at him as a supporter of “savage globalization.” He proved her point as a member of the so-called elitists trying to keep their free trade commitments at the expense of the factory workers. The graphic below shows where the main pockets of strength for each of the two sparring candidates lie for the upcoming May 7th final vote:
In the end, whether or not Marine Le Pen pulls off the third major upset in the ongoing wave of populism sweeping the developed world (beginning with first Brexit and second President Donald Trump’s surprise election), the revolution has already happened. The traditional post-world war parties have been devastated (by the popular nationalists) across Europe and simultaneously co-opted by the populists in Great Britain and the United States.
This graph below shows how extensively this ongoing meltdown of the traditional European political party elite has progressed:
If Macron really defeats Le Pen on May 7th, he will find out how difficult it is to reform the $2.4 trillion French economy at which Nicholas Sarkozy already failed. Fellow Italian reformer and fresh political face, the one-time Prime Minister Matteo Renzi of Italy suffered such a fate after coming to office in 2014 and having to resign in failure at the end of 2016.
Now thanks to Renzi’s disgrace in Italy, Italians are increasingly moving to elect the Five Star Movement party’s leader Beppe Grillo who promises to rip down the political system and move away from the euro and European Union as part of his increasingly popular agenda.
Should Macron triumph in the election then fail to bring the meaningful and much-needed French economic and structural reforms in rapid fashion, Le Pen’s party will be waiting to pounce on him in the next election in 2022. As Politics Professor Dominique Reynie from the Science Po institute in Paris warned:
“The first round vote actually shows that France is in state of fundamental crisis — a crisis of state and a crisis of economy. I can tell you that if a presidential adviser [Macron] can within the space of three years become President, it’s because the system is crumbling.”
Whoever wins the French final round election on May 7th, it’s a good reminder of why you need bullion gold to protect your retirement investments from the potential breakup of the Euro and possibly even European Union.
Germany Turns on Britain in Hard Line Brexit Approach as PM May Calls Snap Elections
Even as British Prime Minister Theresa May called this last week for surprising snap elections on June 8th to strengthen her hand in the upcoming Brexit negotiations, German Chancellor Angela Merkel gave her a cold, hard dose of reality from the German and EU point of view.
As the Iron Lady of Germany faced down the Iron Lady of Great Britain, Merkel announced that the EU block will ensure its interests come first and that the 100,000 German citizens living in the United Kingdom are protected with:
“You might think that these things are self-evident, but unfortunately I have to put it in such clear terms because I have the feeling that some in Britain still have illusions about this. A third-party state — and that’s what Britain will be — can’t and won’t be able to have the same rights, let alone a better position than a member of the European Union.”
This is only the latest assault on the British hopes championed by May as the German officials have accused the British negotiators of underestimating how complex these talks will be and what the new economic reality for the U.K. will look like once it is on the outside of the single common EU market. Most disturbingly for May’s government is the German document on the negotiations which their Parliament just approved.
It eliminates any possibility of specific British industries being able to access the EU markets on a case by case basis. Germany may only be one of 27 countries negotiating the EU side of the Brexit deal, yet since it is the dominant nation and largest economy, its positions will carry enormous weight for both the United Kingdom and European Union teams as they begin to start the Brexit talks shortly following the general election in Great Britain slated for June 8th.
President Trump Prepares To Withdraw the U.S. From NAFTA Free Trade Agreement
Politico has uncovered plans for the American administration to issue a Presidential executive order withdrawing the United States from the three decades old North American Free Trade Agreement pact with Mexico and Canada, per officials in the White House whose names Politico would not reveal.
While the order is still being finalized and debated, it does coincide with President Trump having just placed import tariffs on Canadian softwood lumber because of “unfair competition.” Only last week, the President labeled NAFTA a “disaster.”
The repercussions from such a dissolution of the most significant free trade agreement for the United States, Canada, and Mexico can not be overstated. In consequence, the Mexican peso plunged its greatest single amount since January. At the same time, the cost for insuring the sovereign government bonds of Mexico roared higher by the greatest amount in a month, as this chart shows:
The takeaway from this and the other important stories of the past week is that you can not overestimate the importance of gold that offers insurance and protection during market turbulence. These are all prescient reminders of why you should own gold in times of financial crisis. Do not let anyone talk you out of yours.