Will Britain leave the EU?

The Market Gage - Dillon Gage's Precious Metals Newsletter

Controversy abounds after the comments made yesterday by Bank of England’s Governor Mark Carney. Looking at the coming vote June 23rd, Carney said, “A vote to leave the EU could have material effects on the exchange rate, demand and supply potential.” The consequences “could possibly include a technical recession.”

Wide spread criticism of the governor’s comments have caused a debate among all of Britain’s political groups.

Lord Lamont, chancellor of the UK from 1990 and 1993 and well respected figure said, “The governor should be careful that he doesn’t cause a crisis. If his unwise words become self-fulfilling, the responsibly will be the Governor’s and the Governor’s alone. A prudent Governor would simply have said, we are prepared for all eventualities.”

Why am I writing about this? This referendum; if Britain decides to leave the EU, will have economic consequences for the rest of Europe. Countries in the union would face higher contributions towards the EU budget to compensate for the loss of the second largest economy in Europe. We cannot forget the costs of the migrant crisis and the state of the European economy as a whole. And remember in March the European Central Bank had to add more stimulus.

Another important factor is the negative interest rates for some countries in the EU. I expect negative rates will be around for a while and it is expected that others will be forced to join the club.

No wonder we are seeing the Gold ETF funds increasing almost every day and why gold is up 20 pct. off the lows from last year.

To paint a clearer picture of the years ahead, the possibility of Europe going into economic turmoil could become a reality. And where better to have at least a portion of your portfolio than in physical gold? A good number of Wall Street financial advisors have had clients join the club, but the majority of the equity investors choose the Gold ETF fund. It’s time to explain to investors the advantages of holding physical gold instead of paper as the smarter investment.

Have a wonderful Friday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.