Disclosure: Our content does not constitute financial advice. Speak to your financial advisor. We may earn money from companies reviewed. Learn more
Last Updated on: 13th June 2017, 05:22 pm
This past week saw the disastrous saga of the U.K.'s special snap Parliamentary elections unfold. One British newspaper headline read, “British Voters Choose Chaos.” As a result of the severely weakened Prime Minister Theresa May's minority government position (which she will augment into a working majority by allying with the DUP Democratic Unionists Party of Northern Ireland), the upcoming Brexit now looks like a stark choice between a softer Brexit or a no-deal hardest possible Brexit.
Meanwhile the ongoing Middle Eastern Arab Gulf Crisis showdown between Saudi Arabia, Egypt, Bahrain, and the United Arab Emirates against Qatar turned into an all out economic blockade this past week. Besides having cut all exports and imports to and from the tiny oil rich Arab sultanate accused of sponsoring radical terrorist groups and supporting Iran, Saudi Arabia has even closed its land, sea, and air borders with Qatar.
In France, Emmanuel Macron's Republique En Marche party fared well in the first round of the French General Assembly elections. The socialists were completely eliminated from the final round which takes place this next weekend, making it look more likely that Macron will win a convincing majority in the body which must approve the reform-minded legislation and agenda of the youngest ever president of the Republic.
There seems to be a new and unexpected geopolitical crisis unfolding somewhere in the world on a regular basis now. This is why you must have gold in your IRA. IRA-approved gold will protect your retirement portfolio from the chaos potentially threatening to overtake the financial markets. It's time to brush up on the gold IRA rules and regulations.
British Elections Blow Up U.K. Political Stability As Brexit Negotiations Become Weakened Before They Ever Begin
Last week's June 8th British elections did not end well. The consensus worst-case scenario for Britain and the complex and time-limited Brexit negotiations emerged in the resulting hung Parliament. Prime Minister Theresa May and her Conservative Party will continue to rule thanks to help and support from a friendly allied Northern Irish party the DUP Democratic Unionist Party which won 10 seats. This will be enough to form a barely working parliamentary majority.
The outcome has dramatic ramifications for Brexit talks which will now be delayed once again while the U.K. forms a new government and the cabinet regroups. Thanks entirely to this politically chaotic election result, Brexit now looks increasingly like the choices will be between either a soft Brexit deal or no deal at all. The reasons for this are that May's once-worst fears are now more fully realized. She is now captive to both the hardline euro skeptic and the pro-European wings in her ruling Conservative Party.
Now that she is caught in the middle of the two virulently opposed sides, her Brexit negotiating position is hostage to both of them. If she can not ultimately secure the votes which are necessary to push through Brexit legislation and approve the final deal she hammers out with the EU, then the clock will simply run out and force Britain out of the EU with no exit deal at all.
At stake is both the single market and the customs union. Some ministers are now hoping to work towards staying a party of both treaties, though this would come at the significant price of still having to fund the hated EU budget and giving up jurisdiction over courts to the EU Court of Justice. It would also mean that EU immigration rules would still apply, though the British could limit the numbers some.
They would no longer have any say on the rules which governed them though, as they would lose their EU voting rights. Soft Brexiteers call this the Norway Model, or membership in the EEA European Economic Area of which Iceland and Liechtenstein are also fellow members. Norway pays almost as high a price for this associated membership as the full members do too.
As Brexit Minister David Davis claims that the government will not try to emulate Norway, this leaves them with trying to arrange their own personally tailored arrangement. Since May tied herself firmly to the hard Brexit model, she could probably not deliver such a softer version. This would mean that another leader of the party like Foreign Secretary Boris Johnson would have to stand in as prime minister to deliver it. Besides this, many Conservatives as well as other British voted for full independence and a return of all sovereignty from the European Union.
This is why a no-deal arrangement is looking increasingly likely. It is the scenario that some have described as Britain being pushed over the “cliff edge.” Yet many Conservative members of Parliament are fine with this arrangement as it will allow Britain to reclaim its destiny and heritage as champion of free world trade. In any case, the clock is ticking fast. EU President Donald Tusk pointed out Friday in the wake of the disastrous hung parliament results that “there is no time to lose.”
As for the idea extended by German Finance Minister Wolfgang Schaeuble that the British would be welcomed back if they chose to reverse Brexit, both the manifestos of the two major parties in the U.K. (Conservatives and Labour) are fully committed to parting ways with the European Union. Even if they were not, recent polls still reveal that the majority of the British electorate wants to see the result of the binding referendum carried out, whatever this means. As Theresa May has famously opined, “Brexit means Brexit.”
Gulf Crisis Rages On As Four-Nation Economic Blockade of Qatar Continues
The British Isles are not the only region in chaos this past week. In the Middle East and Persian Gulf areas especially, a full-scale economic blockade is now fully underway. This ideological divide pits Saudi Arabia, Egypt, the UAE and Bahrain at the head of the Arab governments which slashed all ties with Qatar last week for continuously supporting radical groups and terrorism as their state-sponsored agenda around the Middle East.
This week the four main Arab participants have begun to choke off Qatar as they shut down all sea and air transportation links with the small oil rich Arab monarchy based in Doha. Saudi Arabia has closed its land border as Qatar's only neighbor as well. It was American President Donald Trump's call to the Muslim leaders at the Arab Islamic American Conference that encouraged the Arab leaders to crack down on states and groups supporting extremist and jihadis.
Desert country Qatar suffers from a physical reliance on its many Middle Eastern neighbors in order to provide food for the 2.5 million residents of the country. This presents serious potential social unrest problems as the majority of the residents are foreign expatriates. There have been unsubstantiated reports of panic shopping at the grocery stores around especially Doha the Qatari capital as rising fears of a possible food shortage grip the population.
Qatari Finance Minister Ali Shareef Al Emadi attempted in an interview to allay concerns that the oil-rich Arab state is in serious trouble with his reassuring yet somewhat threatening statements:
“A lot of people think we're the only ones to lose in this… if we're going to lose a dollar, they will lose a dollar also. Our reserves and investment funds are more than 250 percent of gross domestic product, so I don't think there is any reason that people need to be concerned about what's happening or any speculation on the Qatari riyal. We are extremely comfortable with our positions, our investments, and liquidity in our systems. We're still a AA country and we're one of the top 20 or 25 globally on our ratings… so I think we are very much better than a lot of people around us. We are going to make sure that we are even more diversified than we were before.”
Yet the markets are not convinced by his calming statements. Last week the Doha stock index plunged 7.1 percent. The Qatari riyal currency has been dropping significantly against the U.S. dollar as capital outflows worry traders, investors, and markets. This is a situation you should watch closely, as it concerns nations which represent a huge share of the world oil output, reserves, and global energy exports.
French First Round Parliamentary Elections Leave Macron in Strong Position
Though the final results are not yet in until the second round of the voting concludes this coming weekend, newly elected French President Emmanuel Macron looks to have pulled off a convincing win in the General Assembly elections in France this past weekend. Predictions are for him to have such a significant majority that he will be able to push through his pro-business and ultra-pro EU plans.
The French Interior Ministry reported that the La Republique En Marche! movement and allies MoDem centrist party garnered 32.32 percent of the total vote. This compares extremely well against second placing right-wing leaning Republican Party and its allies the Union of Democrats and Independents, who scored 18.80 percent. Marine Le Pen's far-right party the National Front also did well enough to move on to the final round with 13.20 percent of the vote.
She is now likely to enter the General Assembly (with several others of her party) for the first time ever, giving her an even bigger vocal platform as “leader of the opposition.” The left party of previous President Francois Hollande was obliterated with a mere 7.44 percent total vote share. They will be completely eliminated from the final round of voting. In the graphic below, Macron's party is yellow, the right party Republican alliance are blue, and Marine Le Pen's is the FN grey below them.
Reuters is reporting that Macron may win up to 445 out of the 577 total seats when the final results accrue. This would give him the platform to force through his international as well as domestic agendas. One of these plans is moving towards a greater fiscal union of the core euro zone countries.
This will likely not sit well with the nearly 40 percent who voted against him in the most harshly contested French presidential election since the Second World War. Evidence of the many who do not like him was obvious in the abysmally low voter turnout of a historically low 48.71 percent. This questions his mandate, and reminds the world that failure will bring harsh consequences from a still embittered and angry French electorate. Marine Le Pen will be waiting patiently should he fail.
You only have to look at the world news headlines to realize that the global geopolitical state of affairs today is a huge mess. This is why you need IRA-approved metals in your retirement portfolio. Gold makes sense in an IRA precisely because it protects your retirement assets like no other historically proven asset class can. Now all you need to decide is whether to choose physical gold and silver bullion or gold and silver ETFs.