Daily Telegraph article Gold is the Final Refuge against currency debasement

[julianj]

Interesting article in the Telegraph here:

Gold is the final refuge against universal currency debasement - Telegraph

Not sure I understood it all, but it seems like there will be more currency volatility in future. Any comments folks?


here's the conclusion:

We have a new world order where China and India are buying gold on every dip, where the West faces an ageing crisis, and where the sovereign states of the US, Japan, and most of Western Europe have public debt trajectories near or beyond the point of no return.
The managers of all four reserve currencies are playing fast and loose: the Fed is clipping the dollar; the Bank of England is clipping sterling; the European Central Bank is buying the bonds of EMU debtors to stave off insolvency, something it vowed never to do just months ago; and the Bank of Japan has just carried out two trillion yen of “unsterilized” intervention.
Of course, gold can go higher.

[Simon]

Hi Julian,

Very interesting article, thank you.

I think silver is potentially a better buy right now - there's far less of it above ground, it's used in industry and it's also a lot cheaper than gold if you don't have much money to invest.

Under QE2, the Federal Reserve is printing $75 billion a month out of thin air (actually most of it is digital money and not actually printed).

The result of this is that the dollar is, as you say, being debased. As commodities are priced in USD, the effect of QE2 is that the US is effectively exporting inflation world-wide.

This had the effect of causing rebellion in Tunisia, the original protests in the Middle East were effectively food riots. Now that's spread to other countries as a general demand for political reform....

...which is now impacting on oil prices....what a tangled web!

I heard a very interesting interview with an advocate of the so-called New World Order last week. Damon Vickers, the man in question, believes that the death of the dollar will be triggered when the US Dollar Index breaks the lows of 2008.

As you can see from the chart below, the trend-line is in danger of being broken, which is pretty interesting:

us-dollar-index.jpg

I'm not saying that the dollar will die, but if the Dollar Index takes a nose-dive, that will almost certainly mean higher commodity prices. That means more for oil, food and also precious metals.