We’re not so sure that the Brexit leave vote will have quite the longer term impact that some think. Well at least not for Britain. But here’s one argument as to why it might lead to the break up of the European Union…
By Justin Spittler
Stocks around the world are in free fall.
As you may have heard, global stock markets crashed on Friday. Here are the final numbers from the massive selloff:
- The S&P 500 closed the day down 3.6%. It was the worst day for U.S. stocks since August.
- The Nikkei 225, Japan’s version of the S&P 500, plunged 7.9%. It was worst day for Japanese stocks since 2011.
- The STOXX Europe 600, which tracks 600 of Europe’s biggest stocks, plummeted 7.0%. It was the worst day for European stocks since the 2008 financial crisis.
- Great Britain’s FTSE 100 Index plunged 3.1%.
When the dust settled, $2.08 trillion had vanished from the global stock market.
According to Standard & Poor’s, it was the biggest global stock selloff in history (surpassing the previous record of $1.9 trillion set in September 2008).
The panic didn’t dissipate over the weekend either. The S&P 500 is down another 2.2% today. Overseas, the FTSE 100 fell 2.6%. Today the STOXX Europe 600 ended the day down 4.1%.
In today’s Dispatch, we’ll explain why this could be the start of something much worse than what we saw in 2008. You’ll also learn the #1 way to protect your wealth from this threat.
• Friday’s selloff began with a “vote heard around the world”…
Two weeks ago, we told you Britain was thinking about leaving the European Union (EU).
The EU, an economic union between 28 European countries, has roots dating back to the aftermath of World War II. Its creators hoped it would prevent historic rivals France and Germany from going to war again. Britain has been part of the EU since 1973.
Most folks thought Britain would stay in the EU. But on Friday, the people of Great Britain voted to leave.
The unexpected decision sent shockwaves across global financial markets. European bank stocks have plunged 22% since Thursday. U.S. bank stocks are down 8%. We’ll tell you more about the disaster in bank stocks tomorrow. Today, we’re covering an equally big disaster in the currency markets…
• The “Brexit” caused Britain’s currency, the pound, to crash…
Britain’s currency, the pound, plunged 8% on Friday. It’s now trading at its lowest level since 1985. You can see the pound’s historic drop in the chart below.
Investors fled the pound for other currencies.
The yen jumped 4.5% on Friday. The U.S. dollar gained 2.2%.
Meanwhile, the price of gold soared 4.8%. It was gold’s best day since January 2009.
• Some folks might find it strange to call gold a currency…
After all, many in the financial media consider gold a “barbarous relic.” They say it has no use in today’s economy.
Casey readers know this is propaganda. Gold is not only a currency, it’s real money. It’s preserved wealth for centuries because it has a rare set of qualities: It’s durable, easy to transport, and is easily divisible. Folks in every country on the planet recognize its intrinsic value.
Unlike paper money, gold has survived every financial crisis in history. It’s a safe haven asset that investors buy when they’re nervous.
After Friday’s huge jump, gold is now up 24% on the year. It’s trading at its highest price since July 2014. And it’s likely headed much higher.
• The Brexit has paved the way for other countries to leave the EU…
Shortly after news of the Brexit broke, France’s National Front leader Marine Le Pen wrote: “Victory for freedom. As I’ve been saying for years, we must now have the same referendum in France and other EU countries.”
Ms. Le Pen is the front-runner to become the president of France next year. Two weeks ago, she said “France has possibly 1,000 more reasons to want to leave the EU than the English.”
Politicians in Italy and the Netherlands are also demanding “the right to choose” to leave the EU. BBC reported on Friday:
Dutch anti-immigration politician Geert Wilders said the Netherlands deserved a “Nexit” vote while Italy’s Northern League said: “Now it’s our turn”.
If one of these countries leaves the EU, the fallout could be far more devastating than what we saw on Friday. That’s because Britain doesn’t even use the euro, the official currency of the European Union. It uses the British pound.
However, France, Italy, and the Netherlands do use the euro. Their exit could destroy the currency, throwing Europe into the worst financial crisis it’s ever seen.
As you can see, The Brexit is about much more than Great Britain. It has set the stage to destroy the entire European Union, the world’s biggest economy.
• Casey Research founder Doug Casey says the EU was doomed from the start…
The EU itself is a completely artificial and dysfunctional union. The Swedes are very different from the Sicilians, and the Portuguese very different from the Austrians. These people have little in common besides a history of fighting with each other. Force them together into a phony union and they’ll become mutually resentful, the way the Germans and the Greeks now are.
The Brexit is proof that the EU doesn’t work. If another country jumps ship, we could witness the end of the European Union as we know it.
At that time, folks around the world would see the euro for what it’s always been…a scam. Here’s Doug again:
The euro is a sure bet to join the ranks of many hundreds of defunct paper currencies. Not one currency in today’s world is backed by a commodity (like gold); they’re backed only by confidence (which can vanish like a pile of feathers in a hurricane). And, of course, the ability of governments to steal from the people. But the euro doesn’t even have that going for it. The European Union doesn’t have the power to tax. Right now, the Eurocrats in Brussels really only have the power to regulate. I’ve long said, “While the U.S. dollar is an ‘IOU nothing,’ the euro is a ‘who owes you nothing.’”
• According to Doug, “a giant financial hurricane” is about to make landfall…
When it does, it will trigger a financial crisis for the ages. Doug explains:
Right now, we are exiting the eye of the giant financial hurricane that we entered in 2007, and we’re going into its trailing edge. It’s going to be much more severe, different, and longer lasting than what we saw in 2008 and 2009.
This coming crisis could cause paper currencies to crash. Eventually, gold will be the only major currency left standing.
So, if you do anything to shield your wealth from the coming storm, own gold. Doug says its value could jump 200%, 400%, or even 500% in the coming years.
We also recommend you watch this short presentation. By the end of it, you’ll learn why Friday’s global selloff was a taste of what’s to come. More importantly, we’ll show you how to protect yourself and your family from this coming crisis. Click here to watch this free video. It’s one of the most important messages you’ll ever see from us.
Chart of the Day
While Friday’s selloff shook up the global markets, gold continued its strong year…
Today’s chart compares gold’s performance on Friday with the British pound. As you can see, the two currencies went in opposite directions. The pound fell 8% against the U.S. dollar while the price of gold soared 4.8%.
Gold is the ultimate safe haven asset. Investors buy it when they’re nervous. In this case, gold protected investors’ wealth during a period of extreme uncertainty.
We think gold could head much higher in the coming months as major currencies around the world continue to lose value.