As regular readers to celticgold.eu know, most Central Banks around the world are engaged in some form of quantitative easing program. These institutions are supposed to be implementing policies that promote stability to their countries currency. What is ironic is that currencies have been one of the most volatile asset classes and have been anything but stable.
Gold is the ultimate form of currency. When looking at Gold compared to all other currencies around the world, it is the best option in this current era of Central Bank intervention. One only needs to look at the numbers to understand why this is true.
- The Gold price in Russian Rubles was up 73% in 2014. (Source: Casey Research)
This is primarily due to the depreciation of the Ruble.
- Over the last 6 months, Gold is up approximately 17% when priced in Euros*.
- In the last 30 days, Gold is up approximately 16% when priced in Canadian Dollars*.
- In the last year, Gold is up approximately 17% when priced in Japanese Yen*.
- In 2014, with Gold still in a bear market, the yellow metal rose against all currencies except for the Dollar. Gold was up in the euro, Japanese yen, Swiss franc, Canadian dollar, British pound, Australian dollar, New Zealand dollar, Chinese renminbi, Indian rupee, Swedish krona, Brazilian real, Israeli shekel, and South Korean won. (Source: Casey Research)
- Gold also outperformed stocks in 2014. In national currency’s, Gold outperformed the NIKKEI 225 (Japan); MSCI (EuroZone); FTSE 100 (UK); RTS (Russia); and KOSPI (Korea) (Source: Casey Research)
We are likely in the beginning stages of currency wars that will last many years. The early results show that gold will perform well during a currency crisis. While at times the volatility will be high, Gold is the only real form of currency that is recognized as money in almost every country around the world.
The Ripple Effect
One of the other effects that is not talked about as of yet in the mainstream press is the devastating impact that a plugging currency can have on an economy. In an article in Business Insider, it is estimated that 20% of Russia’s banks could collapse this year.
The article goes on to say that the banks hold an estimated $192 Billion of external debt, around 70% is dollar denominated. This external debt will get much larger as the Ruble slides against other currencies. This could become a major problem for banks in Russia. (Source: Business Insider 01/2715)
As the currency wars heat up more and more of these types of stories will surface.