Gold is Going Above $1,400 if Le Pen Wins
Gold’s next moon shot could be on the horizon, following a Le Pen victory in France’s Presidential Election this Sunday. Just the way gold surged after Brexit and Trump, so will be the case if Le Pen wins in six days. While Brexit may have marked the beginning of the end for the EU, if Le Pen wins, it will not only secure its demise, but send a sign to the establishment that the populism sweeping the West has not been contained.
In the recent article Macron Victory is Bullish for Gold, I forgot one critical element that just may push Marine Le Pen over the edge in France’s final round of Presidential elections, which I will outline today. (Note: My previous article argued that long-term, continuing the policies of debt-laden France were bullish for gold. However, short-term, gold would surge following a Le Pen victory.)
Le Pen Victory tied to Fillon Supporters
I assumed because conservative Francois Fillon has publicly denounced Le Pen, urging his supporters to back Macron that they would. Taking a closer look at his policies, it becomes quite obvious that many, if not millions, of his supporters will vote for Le Pen.
Fillon came in third in France’s first round of voting with 19.9%, behind Le Pen’s 21.5%. I did acknowledge some votes would go to Le Pen, but not nearly as much as I should have. Here is why:
Fillon has backed the EU all along, but is strongly opposed to the Schengen system of borderless travel between members of the bloc. On a trip to my in-laws over Christmas I drove from Switzerland to France and from France to Germany. There are no borders. Sometimes there is no one outside. They are sometimes playing cards inside a small building my family tells me. On occasion I have seen a group of two or three outside with automatic weapons, walking around, talking, but not checking cars or the people in them. You just drive through, maybe slow down to 20 kilometers an hour. This is the Schengen system.
From a rational standpoint, I can see why they’ve given up. Nation borders are so close with some people living in France and working in Switzerland and vice versa; the borders have melted away over time. But there are always winners and losers with borders, via trade and now terrorism.
In Europe’s Schengen Area, internal border checks have largely ceased to exist. Signed on June 14, 1985, The Schengen Agreement is still in effect.
“It proposed measures intended to gradually abolish border checks at the signatories’ common borders, including reduced speed vehicle checks which allowed vehicles to cross borders without stopping…”
In 1985, the world and Europe was a different place. Fillon’s voters know that, and despite being establishment types, many will vote for border control. Le Pen is the last candidate offering it. The next policy change that Fillon supporters can only get from Le Pen rests with immigration.
Fillon ran on the policy of introducing a quota limiting the number of immigrants entering France. The establishment candidate Macron wants strong EU borders, but has said little about France and her borders. This will be a sticking point with many of Fillon’s voters. With no change in immigration policy, some will surely go Le Pen.
According to Express UK,
“Mr Fillion said radical extremists who categorically refused to adhere to – and did not respect – the values of the French republic should be “banned” from entering France.”
Fillon has contested that “We need a liberal ‘Islam of France’ that is free from foreign influence.”
In a February article, Fillon explained,
“Here in La Réunion, Muslims and Christians co-exist peacefully; the same, however, cannot be said for mainland France.”
On Friday, the quiet island of Reunion erupted after two members of a police task force were wounded by gunfire attempting to arrest a man, who recently converted to Islam, on terrorist charges. Upon entering the apartment, “they were greeted by an armed jihadist.”
Apparently, the man’s apartment yielded several weapons and supplies to make Molotov cocktails, according to French Interior Minister Matthias Fekl.
Lucky for Fillon, he has already slipped out of the limelight. His days of holding up the remote French island of Reunion as a shining example are clearly over. If 25% of his voters go Le Pen it would be a 10 point national swing that could finish Macron.
Le Pen Joins Forces with Dupont-Aignan
In Macron Victory is Bullish for Gold, I explained, “Le Pen, Melenchon and Dupont-Aignan lead three parties that have either an aversion to the EU or the current establishment.”
Dupont-Aignan (who garnered nearly 5% of the vote in the first round) has formally aligned his party with Le Pen. Over the weekend, Marine Le Pen held a joint conference with Dupont-Aignan where she said that, if elected, she would name him as her prime minister. In a strategic move, the alliance will lock in Dupont-Aignan’s votes bringing Le Pen to 26-27%, or more than half, of the popular vote.
With Le Pen at approximately 26% of the vote before adding in any votes from anti-EU Melenchon’s 19.6% supporters or the conservative Fillon’s 19.9% it is easy to see how this election could slip away from Macron.
With the Presidency becoming more realistic by the day and in conjunction with her alignment with Dupont-Aignan, Le Pen softened her position on the immediate referendum of the EU. Regardless, the anti-establishment vote of Melenchon, Dupont-Aignan and her party, the National Front are going to make this election a dog fight, not a cake walk, for Macron. The wild card is the establishment, but conservative Fillon’s 19.9%. If this group of voters abstain or any significant portion go to Le Pen, she could easily win.
Greece’s European Commissioner on Migration, Dimitris Avramopoulos spoke Monday evening at the University of Geneva. He told the audience that, “The 27 [EU states] will need 6 million immigrants in the future.”
These kind of comments could not come at a worse time for Macron, who is struggling to get the young voters to support him. The National Front’s base rests with young voters as unemployment remains stubbornly high at roughly 25% for young people in France.
chart source: http://www.tradingeconomics.com/france/youth-unemployment-rate
“Notably, the largest demographic for National Front support comes from voters aged between 18 and 24, where Le Pen polls at 40 percent.”
Young people and those out of the workforce will not be voting for more immigration on Sunday.
The final threat to Macron could come by way of abstention.
“Supporters of Melenchon and the right’s Francois Fillon may well stay home, or in some cases, may vote for Le Pen. Bad luck may also increase abstention rates; the long-weekend loving French are scheduled to vote on the eve of a three-day holiday. The election falls on the day before the May 8 public holiday celebrating the Allied victory over Germany in 1945.”
Le Pen’s supporters, much like Trump’s supporters in America, are enthused when compared to the establishment groomed Macron. Enthused voters show up at the polls. The way I see it, Le Pen is making all the right moves down the stretch and has a great chance of winning. While the polls say otherwise, the French people have shown a dramatic desire for change. The establishment candidates of Fillon and Hamon only garnered about 26% of the popular vote. Two weeks may just be enough time to expose Macron as the ultimate neo-liberal, establishment candidate. He did after all get his start in politics with Francois Hollande, one of most disliked President’s in French history.
For the first time in nearly 60 years, the French people failed to elect a mainstream left or right-wing party to the final round of voting. Hold onto your hats, and your gold because Sunday is going to be a nail-biter.