The International Monetary Fund (IMF) has revised its growth projection for the Eurozone in the wake of Brexit. But instead of basing its revision on a strict subtraction of the UK’s Gross Domestic Product (GDP) from that of the Eurozone, the IMF is viewing Brexit as an agent of uncertainty, dampener of financial confidence, and a generator of increased market volatility in neighboring economies.  Thus the organization is scaling back its forecast, “with growth revised down by about 0.2 percentage points for 2016 and by close to 1 percentage point in 2017.”

One Reason A Brexit Makes Sense Image

Officials at the IMF stressed that the slowdown in the UK may mean decreased imports from the Eurozone. Reduced UK demand would also contribute to reduced market confidence in Eurozone countries.  While there are political overtones to the IMF’s projections, the noted credit-rating agency Moody’s also claims Brexit has the potential to dismantle the entire EU consortium.

In the UK these projected negative effects of Brexit should come as no surprise.  Days before the vote, in a letter to the Guardian ten Nobel-prize winning economists warned of dire economic consequences should the vote to leave succeed.  In their letter they emphasized Brexit would disrupt trade deals not only with Europe, but also the U.S., Canada and China.

One economist, Christopher Pissarides of the London School of Economics, told the Guardian Brexit uncertainty would curtail investment and job creation. He also correctly predicted the depreciation of Britain’s currency, the pound sterling.

Meanwhile, European banks are still struggling to recover from their own financial dire straits. The European Banking Authority has just publicized the results of its “stress test” for fifty-one European banks. While some banks did reasonably well, the EBA determined the Banca Monte dei Paschi di Siena, of all the banks tested, would have the most difficulty covering its “toxic loans” from now through 2018. The bank may have received a last-minute reprieve on July 29, when underwriters agreed to a turnaround plan. It seems its paradoxically venerable status as the world’s oldest bank is part of what’s keeping the institution from bankruptcy.

Clearly then, both the Eurozone and the UK have their work cut out for them. It appears the Bank of England is prepared, if necessary, to intervene with an appropriate dose of monetary policy (aka quantitative easing) and interest rate cuts.

On the Eurozone side, European central banker Mario Draghi is taking a “wait and see” position regarding another round of quantitative easing.  He’s obviously taken a cue from U.S. Fed Chair Janet Yellen’s “non-strategy strategy” with respect to U.S. rates. According to a July 31 article in the Guardian, Draghi’s decided to hang tight for another six weeks before making his decision.

In an amazing coincidence, his decision will come shortly after the next meeting of the Federal Reserve’s Open Market Committee in late September. The FOMC will announce whether (or not) the Fed will raise rates—and only then will Draghi show his cards.  Since quantitative easing and interest rate manipulations come from the same bag of tricks, central bankers don’t welcome going it alone under an international spotlight.

In the meantime, with respect to your own nest egg, you should take these central bankers’ uncertainty as a serious warning. Domestically, we have a tense and polarizing election going on, with the candidates sending out radically different signals about the U.S. economy.  Internationally, the economies of our trading partners in Europe and Asia are in disarray.

Obviously this is not an ideal moment to hunt for an investment that will serve as a magic pill. But it is a good time to protect your retirement funds by putting what you can into a liquid hard asset that holds its value, like physical gold – the safe haven of choice for professional investors living in interesting times.