by Mike Gleason, Money Metals:

Coming up Axel Merk joins me to break down the situation in the Eurozone, the likelihood of more nations following the UK in exiting the EU and how all this might affect the dollar, Fed policy and precious metals. Don’t miss an enlightening interview with Axel Merk of Merk Investments, coming up after this week’s market update.

A political crisis in Italy roiled markets earlier this week, sparking a flight to U.S. Treasuries and a spike in the Dollar Index. That spike was short lived, however. The dollar quickly came right back to where it started the week, a possible indication that an upside exhaustion point has been reached in this spring’s dollar rally.

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Precious metals markets are also seemingly on the verge of a major turning point. Nothing decisive happened this week, though, as gold continues to trade close to the $1,300 level and silver still finds itself stuck in a tight trading range.

Silver prices currently check in at $16.48 per ounce, down 0.3% since last Friday’s close. Spot gold is down 0.4% for the week to trade at $1,296 an ounce. Meanwhile, platinum is unchanged at $911 and palladium is off by 0.7% this week at $988 per ounce as of this Friday morning recording.

Precious metals prices have hung tough during the dollar rally of the past few weeks. The latest boost to the dollar came as anti-establishment political parties in Italy moved to begin breaking the country’s ties to the European Union. Without Italy, the entire EU could collapse. Italy is the euro zone’s third biggest economy. More importantly for global financial markets, Italy has a massive sovereign debt obligation of about $2.5 trillion in U.S. dollar terms.

The long-term future of the euro as a viable currency is in doubt, but it probably won’t go away anytime soon. The same could be said of the U.S. dollar if for different reasons. Investors who jump from one troubled fiat currency to another in hopes of landing on a safe haven are being short sighted. In the long run, all national currencies stand to lose value and some may even go into hyperinflation like the Venezuelan bolivar.

Venezuela’s annual inflation rate is now approaching 14,000%. The socialist-run country has left its people suffering under constant shortages of bare essentials such as food and medicine.

In a country now so economically destitute that many Venezuelans have been reduced to eating rats, insects, and other unconventional foods just to survive, those who do have any savings to speak of have also been forced to take unconventional steps to protect their wealth. As the Venezuelan bolivar becomes increasingly worthless, people are turning to the black market. They’re turning to U.S. dollars. They’re turning to cryptocurrencies. They’re turning to scrap gold, to silver coins, and even to aluminum cans.

We may never find ourselves in the chaos of a true hyperinflation. But even modest inflation can exert a devastating impact on the value of savings and investments after a number of years. Physical precious metals are among the premier inflation-fighting assets. If hyperinflation ever does break out and parts of the economy revert to barter, then you may actually need to use your bullion as money.

It’s been said that gold is the money of kings while silver is the money of the masses. During an economic crisis, copper may become the money of the expanding peasant class. For this reason and for another way to protect themselves against inflation, metals investors may wish to consider adding some physical copper to their stash. Copper fills an important gap, being suitable for smaller transactions where gold and even silver may not be practical options.

Even if you never need to use copper in barter or trade, you may still be glad you have some exposure to the industrial metal for its upside potential. Copper prices haven’t done much in 2018, but they are still up big since Donald Trump’s election in 2016. President Trump’s pro-manufacturing, pro-infrastructure policies should put additional bullish pressure on the copper market. Copper is essential in the modern economy. Electronics, automobiles, and utilities among other things can’t function without it.

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