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Gold

A Return to the Gold Standard?

In my last post, I explored the possibility that the role of the Chinese Yuan (CNY) will expand to the point that it could rival – or even overtake – the US Dollar as the world’s preeminent reserve currency. Ultimately, I concluded that the constraints on widespread foreign ownership of CNY assets are too great, and that as a result, the Dollar’s position is safe for the time being. What about the notion that all currencies are doomed? In this case, the biggest threat to the US Dollar won’t come from China, but rather from gold.

Currency War Devalues all Currencies…Except for Gold

Have you ever heard currency cheerleaders rave about how unique forex is because there is never a bear market? Since all currencies trade relative to each other (when one falls, another must necessarily rise), it couldn’t be possible for the entire market to drop at once, as happens with other financial markets. The ongoing currency war might be turning this logic on its head, as currencies embark on a collective downward spiral. Profiting in this kind of market might involve exiting it altogether, and turning to Gold.

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