Just a few years back, the EU, and Greece specifically, dominated the financial media as the nation headed for a major default and bankruptcy. Sovereign debt issues have been an area of focus in the region for some time, and there has been ongoing discussions about the health of the union for years.
Those discussions are likely to pick up in pace once again, as recent developments in Italy are a major cause for concern. The country is headed for new elections later in the year, as populist politicians failed to form a new government. The failure to form a new government has quite likely opened the door to more radical parties gaining ground, possibly even turning the election into a de-facto vote on the country’s EU membership.
Analysts are not only worried about what could happen in Italy, but are also very concerned about the threat of contagion. Global stock markets are plunging on Tuesday, while yields on Italian debt are rising as investors seek a larger risk premium. Spanish, Portuguese and Greek debt are also on the rise.
Italy is the third largest economy in the EU, and accounts for some 15% of the region’s GDP. The nation has significant debt, however, having the third highest level of indebtedness behind Japan and Greece.
It is impossible to say just how a messy Italian exit from the EU would affect global markets. The effects could be substantial, however, ratcheting up borrowing costs across the region and possibly even the world. The potential for an Italian exit could become a major area of focus in the months ahead, and comes at a time when the ECB is attempting to unwind its stimulus measures.
Sovereign debt and geopolitical issues are major market influences, and when major negative issues come to a head, the impact on global stock, debt and currency markets can be significant.
This is yet another reason that a portfolio should contain a large allocation in perceived safe haven assets like physical gold.
Gold has been considered a reliable store of wealth and value for centuries, and is considered by some to be the only real form of money there is. The metal may not only potentially provide a meaningful hedge against inflation, deflation, and weaker currencies, but could also potentially see significant upside during periods of geopolitical or market turmoil.
A potential breakup of the EU could keep investor demand for physical gold very strong. In fact, were more nations to leave the union, the resulting chaos could be unlike any that financial markets have seen before.
The time to protect your wealth and hedge your other holdings is now. Adding gold to your portfolio has never been easier than it is today.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have, and can even show you how to build a significant allocation in this key asset class using your IRA account.
Don’t wait for the next major geopolitical, debt or currency crisis before taking steps to insulate your portfolio. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, debt-to-GDP, ecb, eu, fiscal policy, GDP, gold, greence, italy, sovereign default