There is an increasingly disorderly currency war going on out there, and the advantage of gold is clear– they can’t print it, they can’t default on it, and there will always be demand for it. Simply put, in the global currency wars, owning gold is like abandoning the battlefield altogether. Words: 270; Charts; 2
So writes Tim Price, Director of Investment at PFP Wealth Management in the UK, in a guest post* at www.sovereignman.com entitled What Warren Buffet doesn’t understand about investing.
This article is presented compliments of www.munKNEE.com (Your Key to Making Money!) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
Price goes on to say in further heavily edited excerpts;
Many investors are losing faith in gold on the basis that its price in US dollars has recently declined. Context is everything. Express the price of gold in another currency, the Japanese Yen, [see chart below] and gold looks relatively buoyant so it comes down to what sort of money you want – and in an environment of competitive currency devaulation, it’s an important choice to make.
- Is the First of Many Currency Crises Just Now Unfolding? Are Gold & Silver About to Take Off As a Result
[To decide what sort of money you want]… the chart [below] is used by fund managers at Stratton Street Capital to help assess sovereign credit quality. They suggest, and we [concur], that it also has merit in assessing likely currency movements too.
In a global deleveraging that is likely to persist for some years, the heavily indebted countries (the darker colors in the chart above) will desperately need to attract foreign capital to help service their heavy debt loads and, in order to do so, they will likely devalue their currencies but one currency it doesn’t highlight is gold.
There is an increasingly disorderly currency war going on out there, and the advantage of gold is clear– they can’t print it, they can’t default on it, and there will always be demand for it. Simply put, in the global currency wars, owning gold is like abandoning the battlefield altogether.
Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
* http://www.sovereignman.com/finance/what-warren-buffett-doesnt-understand-about-investing-10874/ (Written by: Tim Price; © Copyright 2012 Sovereign Man, All rights reserved )
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I expect the eventual endgame to this whole Keynesian monetary experiment that has been going on ever since World War II [will] finally terminate in a global currency crisis. [That being said,] I’m starting to wonder if we aren’t seeing the first domino – the Japanese yen – start to topple…[It has] cut through not only the 2012 yearly cycle low, but also the 2011 yearly cycle low and never even blinked [and should it continue its steep decline] and break through the 2010 yearly cycle low [of 105.66] I think we have a serious currency crisis on our hands. Needless to say, if the world sees a major currency collapse… it’s going to spark a panic for protection – to gold and silver. Wouldn’t it be fitting that at a time when they are completely loathed by the market they are about to become most cherished? [This article analyzes the situation supported by 3 charts to make for a very interesting read.] Words: 620; Charts: 3
We believe that we are in the “competitive devaluation” stage presently [see graph below] as country after country is printing money in order to lower rates and doing whatever possible to devalue their currency – to have the fastest currency in the…race to the bottom – in order to export their goods and services. [The next stage will be protectionism and tariffs. This article gives an update on the race to debase.]