This Vote Is Far More Important Than the U.S. Elections
On December 4th, 2016, the country of Italy, which is an integral part of the G-7, will vote on a referendum regarding constitutional changes, but the main part of the day will be that which will shape the political and economic map of Europe for decades to come and will send shockwaves throughout the planet.
The vote will have immediate effects, as well as long-term effects on the global economy for years. The referendum in question is the Italian vote on constitutional changes, but among others things, it’s a way for the Italian people to decide on their future with regards to “Italeave” – the Italian version of “Brexit” – a decision to exit the Eurozone.
A decision by the people to leave the joint Euro market will be detrimental for the E.U., as Italy is one of the largest economies, along with Germany and France. Not only that, but a decision to leave would mean the resignation of their Prime Minister, Matteo Renzi.
Unlike Britain, which is a separate island and didn’t share a common currency with the rest of the joint market, Italy is a genuine and integral part of mainland Europe, and its economy is solely based on euros.
Implications and Possible Scenarios
The Prime Minister, Matteo Renzi, has already announced that if the referendum doesn’t pass, he will resign at once. This alone will scare investors into safe havens, but the assets that constitute safe havens have been changing in recent months.
The most important thing to understand here is that other countries will follow suit. If Italy exits the euro market, it essentially means the end of the block, and the panic will be felt throughout the continent. The euro can lose much of its credibility, and gold and silver prices can go up 20%-25% as a result.
With the addition of RMB, the Chinese currency, to the SDR basket starting October 1st, they will now be able to issue SDR bonds. The power is shifting east.
This means that the next market panic might show us the new face of “safety bonds,” and if the Chinese ones are sold to investors, it means that Treasury bonds will stop being the only “safe haven” bond in the world.
This would truly mark the greatest financial change to the dollar hegemony since the formation of Bretton-Woods in 1944. That’s why it is seriously important for every investor to get familiar with the 5 principles of investing success.
How to Prepare for This Event
The most important thing that one must keep in mind is that unless he actually lives in Italy or its main trading partner, the likely effects to his career or employment are minuscule, at best. It is your portfolio — and not your career — that you should be concerned with.
- Increase your allocation of Crisis Hedges to 20% of your portfolio: Physical gold and silver will always be the best choice for astute investors who understand that wealth preservation is, at times, more important than chasing profits. We live in dangerous economic times, and losing your nest egg is not an option.
- Stocks are risky, and you should only own the best: The major indices have enjoyed 8, almost 9 uninterrupted years of price increases. Due to QE programs, inflation targeting, negative interest rates, and now, central banks buying stocks on the open market, the stock market has become the most expensive it has been in over a century.
The S&P 500, for example, is trading at a multiple that was only reached in the Dotcom bubble and in 2008. Narrow your portfolio down to only the most rock solid businesses, like these two.
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The mission of Wealth Research Group is to provide you with a plethora of knowledge and the mental capacity to become your own economy and build riches no matter what is happening globally.