The mainstream media claims Emmanuel Macron’s recent victory in the French presidential election will turn back the populist tide that’s sweeping across Europe, and around the globe.
I say that’s pure baloney — don’t believe it for a minute!
In fact, what’s going on in Europe right now only confirms the bold prediction made by my friend and colleague Larry Edelson many years ago: That the EU will soon cease to exist. It also tells me the historic cycle convergence he so accurately forecast is in fact accelerating. Here’s why …
First the facts. Yes, centrist candidate Macron turned back the anti-EU challenger, Marine Le Pen, to win the French presidency. But this doesn’t change the downward spiral of France or the EU.
Macron’s win wasn’t much of a surprise. After all, he enjoyed a large and growing lead over Le Pen in the run-up to the vote. So, the outcome was largely expected. It was also no surprise to me when the euro sold off overnight on the news while the dollar strengthened. Just as our Edelson Wave model correctly forecast.
It was a classic sell-the-news reaction.
What’s more, it tells me loud-and-clear that currency markets don’t see Macron as a savior for France, much less for the euro. In fact, the French election outcome is a major long-term bullish catalyst for key markets. That includes precious metals and the dollar, as I’ll explain.
Macron won the French election by billing himself as a middle-of-the-road candidate in a field full of extremists. He claimed to be a political outsider. One who could unite France with a new kind of politics.
The truth is, Macron’s got his work cut out for him. His job now is to lead an increasingly fractured nation. In his victory speech, Macron said: “I will fight with all my strength against the divisions that are undermining us.”
Mark my words, he’s going to need every ounce of strength he can muster. Next, he’s got to prove that his one-year-old political party is even capable of winning a majority in French legislative elections in June.
That’s because this election revealed growing fault lines among the French electorate. Millions of voters fled traditional parties for candidates on the extreme left and the far right. In fact, the hard-left, Eurosceptic candidate Jean-Luc Melenchon won almost as many votes as Le Pen in the first round!
This means France is fertile ground for future radical candidates. They could thrive with this electorate, should Macron fail to deliver the kind of change needed to address France’s deep-seated problems and increasingly unhappy population.
And it’s easy to see why.
The people of France are fed up. Just like the people of Spain, Portugal, Greece, Italy, the U.K. — you name it!
They’re ALL finally realizing the social welfare state is unsustainable. It’s a broken, dead-end model that will ultimately end in massive bankruptcy. But they don’t know exactly what to do about it.
And don’t forget that entrenched interests run deep, thwarting every attempt at real reform in France and every other European nation.
France is the most-bloated social welfare state in Europe today, but every other EU nation makes the list as well. Unfortunately, so does the United States.
Our ultimate day of reckoning is fast approaching, too. But right now, Europe is ground zero for this debt-default disaster of epic proportions.
The social welfare state is simply no longer sustainable, and it’s just a matter of time before the EU comes apart at the seams and the euro currency collapses. That’s exactly why I rushed you an urgent flash alert prior to the French election, recommending you add to your ProShares Ultra Short Euro ETF (EUO) position. More on that in a minute.
All over Europe, people are rising up because they’re absolutely fed up with being told what to do by EU bureaucrats in Brussels.
Many years ago, when the euro currency was at its zenith, Larry warned us all that the EU will soon break apart, and the euro currency was doomed. He predicted that it was only a matter of time before both collapse.
Larry’s prediction rings even more true with the French election results. And there’s still more to come in June’s parliamentary elections in both France and the U.K., and later this year in Germany!
Ultimately, these events will accelerate the default of the EU … and every other Western social welfare nation.
Now, many investors think a sovereign nation can’t ever default on its debts. But they’re dead-wrong.
It’s already happened and it’s brutal. It happened to Iceland in 2009.
In 2009, Iceland’s GDP stood at $14 billion. But due to gross financial mismanagement over the preceding years, all three of the country’s largest banks collapsed. Iceland’s economy essentially became built on a mountain of debt.
They issued bonds like there was no tomorrow. Iceland’s government officials really became investment bankers. And quite frankly, they had no idea what they were doing.
Prior to its stunning bankruptcy in 2009, everything looked rosy. Foreign investment was flooding into the country, and Iceland’s standard of living rose dramatically.
But then the bottom fell out.
Almost overnight, the lives of every citizen in the country changed forever. Iceland defaulted on over $60 billion in debt: An amount four times greater than the size of its entire economy. The people were completely powerless to do anything about it.
When Iceland defaulted, it was an economic catastrophe. Iceland’s currency fell off a cliff. Imagine having $100,000 in your bank account one day … and the next, it was barely enough to buy you a moped instead of a Mercedes.
Iceland’s stock market was shut down for days. Investors tried to preserve their wealth by selling their plunging stocks. But they watched helplessly as their wealth vanished before their eyes.
With its credit rating downgraded, it was impossible to borrow money to start a business or buy a home. International investors yanked out their money in a big hurry, too — taking jobs and entire industries down with it.
Inflation skyrocketed at a rate not seen in any developed country in decades. Political unrest flared, unemployment skyrocketed, and the standard of living for the average citizen was set back an entire generation.
So, mark my words: A similar scenario is about to play out in France … Greece … Spain … Italy … eventually, across Europe. Then the crisis will hit Japan, and ultimately the U.S., just as Larry predicted. Worse, this disaster is likely to strike sooner than any of us expected.
In the EU, Greece, Italy and Spain each owe a staggering $1 trillion to the European Central Bank — debt they will never be able to repay. Japan’s $9 trillion national debt is TWICE the size of its entire economy.
And here in the U.S., the “official” national debt stands at $19.8 trillion today.
But if you include unfunded liabilities and all other U.S. debts, the total is a massive $170 trillion!
It’s clear that Larry’s forecasts are playing out in spades right before our eyes. We are witnessing the collapse of the European Union experiment in real time.
The first nail in the coffin came last June when the U.K. surprised the world — but not me — by voting to “Leave” the EU, triggering Brexit. Practically nobody saw it coming, especially financial markets.
But Larry’s cycles analysis was clear: Europe is going down, and Brexit was just the first domino to fall.
Next month, a new parliamentary election in the U.K. will tell us how hard the Brexit will be and the impact it will have on the rest of the EU.
Also in June, Macron will try desperately to win a majority in French legislative elections — good luck.
Germany has long been the glue holding the EU together. But chancellor Angela Merkel is in trouble with elections looming later this year. Her approval rating is plunging. And German voters are increasingly rejecting her globalist agenda, with nationalist sentiment gaining ground.
Italy’s next scheduled election isn’t until early 2018. But after Prime Minister Matteo Renzi resigned in February as leader of the ruling Democratic Party, Italy could be yet another European nation to hold a vote at any time this year.
And the opposition Five Star Movement in Italy has already called for a nationwide referendum to pull Italy out of the euro, which means the beginning of the end for Italy’s bankrupt banking system. Italian banks have a massive $380 billion worth of “impaired debt” — meaning loans about to go bust, likely bringing Europe’s entire financial system down with it.
It’s a house of cards. And all our cycles research indicates that an irreversible march toward this final great debt crisis has already begun.
So, what does this mean
for precious metals and other
key markets?
Recently, I’ve seen several mailbag questions from Real Wealth Report members asking for updated cycle forecast charts on several markets.
Ask and you shall receive …
First up: Gold!
Below is the latest E-Wave cycle forecast chart for the yellow metal, and I’ve extended the time frame out to early 2018 to cover the rest of this year. Please remember: Larry always cautioned us that the accuracy of the cycle turn date projections is best when using a forecasting window of about three-months.
As you can see from this bigger-picture view, gold is in store for a choppy trading range over the summer and fall. You can see volatile swings, both up and down, from June through September. But importantly, this takes place within the context of a general uptrend for gold. A cycle high is indicated in early October, followed by a decline into December.
The good news: The next major cycle low for gold is forecast in mid-December followed by a sizeable year-end rally that should carry gold much higher into early 2018!
Second: The Dow
The stock market is living on borrowed time and is way overdue for a correction. In fact, the vast majority of stocks have likely peaked already. Of course, the indexes could move to new record highs, just as the Nasdaq-100 Index has been doing. That’s because they are market-cap-weighted. That means they are driven higher by a handful of stocks — while most stocks languish far from new highs.
Look, the entire rally in the Nasdaq this year has been led by just five stocks. I’m sure you know who they are: Apple, Google, Amazon, Facebook and Microsoft. These five “cult” stocks alone have accounted for nearly 60% of the gain in the Nasdaq-100 Index this year, and more than one-third of the year-to-date rise in the S&P 500 Index.
That’s terrible market breadth that is simply not sustainable for long.
The Dow is actually one of the few markets that hasn’t put in a new high in recent months. As we go to press, the Dow’s peak of 21,169 posted on March 1 has yet to be surpassed. Meaning, the market may have peaked already.
When this decline finally gains downside momentum, expect the Dow to fall sharply into September. There is a cycle low turn date forecast early that month, followed by a bounce into October. But this will prove to be a false rally destined to end badly. Sure enough, as you can see in the chart, the Dow should roll over once again into the new year. The Dow looks set to end 2017 lower than it started the year.
Our analysis tells us that the Nasdaq-100 Index is likely to be an even-bigger loser than the Dow. Why? Because the tech-heavy Nasdaq is much more over-inflated right now than blue-chip stocks. That’s exactly why, we’re aiming for even more gains from the coming market decline with the ProShares Short QQQ ETF (PSQ), recommended in my flash alert on May 3.
Third: The Dollar
Who says the dollar and gold can’t go up together? They can. Indeed, they’ve done so in the past, and history is about to repeat.
As you can see in this chart, the dollar is about to embark on a major move higher this summer. That’s most likely as a result of turbulence from upcoming elections in Europe, as I’ve pointed out before.
In late July, we expect a cycle high turn date for the buck, followed by a correction into October. But then the dollar will rally again into year-end. The biggest loser against the dollar’s strength will be euro weakness, which is precisely why you should have added EUO to your portfolio.
Now, please don’t read too much into the magnitude of the decline, or the rally for that matter, in any of these cycle charts. Remember, the timing of the turn dates is much more important than the amplitude of the swings from high to low or vice versa.
What you can clearly see from examining both the gold and dollar chart is that BOTH markets will rally together this summer, and again into year-end. So much for the myth that the dollar and gold can’t rise together — invest accordingly.
Basic Survival Strategies
U.S. stocks continue to grind higher, defying gravity in the process. But now they appear to be topping out, as only a handful of stocks are keeping the major averages at these inflated levels.
So, continue to remain patient. Based on my longer-term forecast, I believe the opportunity to get long stocks for a substantial ride higher … to Dow 25,000 and eventually 31,000 or more … is coming. But wait for my signal after a near-term correction.
Meanwhile, let me update you on your existing positions …
FIRST, continue to hold your physical gold as recommended. If anything changes, or I decide you should hedge your current holdings, rest assured I will notify you immediately in Real Wealth, or via a Flash Alert if necessary.
Continue to hold your …
- Core Gold Bullion (GOLDS), up 216.1% since originally recommended.
- SPDR Gold Shares (GLD), up 174.4% since our initial recommendation.
- Tocqueville Gold Fund (TGLDX), up 18.7%.
SECOND, hold your Platinum Bullion (XPT) and Palladium Bullion (XPD), which should be very minor in holdings.
THIRD, for spot silver: You should have 5% of your Basic Survival Strategies funds invested in Silver Bullion (XAG) when it hit $16.30 on Nov. 23. Hold. I will let you know when to add-to, or hedge the position if need be.
FOURTH, gold and silver mining stocks appear to have bottomed already, plus our E-Wave cycle model forecasts a rally into July. So now is a great time to add TWO new high-quality mining stocks to our holdings in the Basic Survival Strategies portfolio.
NEW RECOMMENDATION: #1: Using 3% of your Basic Survival Strategies funds buy IAMGOLD Corp., symbol IAG, at the market. When filled, place a good-till-canceled sell-stop at $3.05.
NEW RECOMMENDATION: #2: Using 3% of your Basic Survival Strategies funds buy Wheaton Precious Metals Corp., symbol WPM, at the market. When filled, place a good-till-canceled sell-stop at $18.40.
Also, continue to hold Yamana Gold Inc. (AUY), Goldcorp Inc. (GG) and Kinross Gold Corp. (KGC) — with good-till-canceled protective sell-stops at $2.34 … $11.49 … and $2.25, respectively.
I’ll be looking to add to these positions soon, but for now, be patient. Our time to load up on more miners is coming soon.
And remember, I’m constantly scanning my watch list of high-quality miners with low production costs for new potential buy recommendations. Stay tuned, because I expect to add substantially to your mining stock holdings again later this year.
FIFTH, keep holding your shares in Vantiv Inc. (VNTV) with a good-till-canceled sell-stop at $49.74.
If you’re not on board already, for whatever reason, use 3% of your capital allocated to Basic Survival Strategies, buy Vantiv Inc., symbol VNTV, at the market. Place a good-till-canceled sell-stop at $49.74.
Sixth, keep holding your shares in Textron Inc. (TXT) with a good-till-canceled sell-stop at $42.68.
If not on board, using 3% of your capital allocated to Basic Survival Strategies, buy Textron Inc., symbol TXT, at the market. Place a good-till-canceled sell-stop at $42.68.
