One Golden Decade, 13 Decayed Currencies

By: Adrian Ash | Mon, Jan 4, 2010
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Gold up, Dollar down...? Not entirely...

SO THE LAST DECADE of rising gold prices simply mirrored the US Dollar's steady decline. Right...?

Well, no actually, as BullionVault has repeatedly noted...and never less than when clutching a whisky and ginger this past Yuletide...typically to a fast-emptying room.

Gold's tripling-and-more since Tues 4th Jan. 2000 came against all major currencies, let alone the minor ones. In fact, when judged against a truly globalized basket of the globe's truly basket-case currencies - those various monies issued by the top 10 economies in terms of Dollar-GDP - gold turned decisively higher in mid-2001...looking back only a handful of times and never for more than a 20% drop.

All about the Dollar? Don't you believe it.

Yes, volatility and violence rose together as the gold price pushed higher. And yes, the Dollar-price gains outstripped those in the Euro (292% vs. 180%) and commodity-led Canadian Loonie (179%).

But your local fund managers, financial advisors and op-ed pundits would have been hard-put to beat those returns with anything else. And as gold remains (at least in the view of die-hard, gloating and lone-drinking "gold bugs") the only viable one-world currency, it's worth glancing at just how it performed against the last decade's various top 10 monies by economic weight...

Currency Gold's Decade Gain (%)
US Dollar 292
Euro 181
Yen 249
Chinese Yuan 218
UK Pound 298
Brazilian Real 273
South African Rand 365
Canadian Dollar 179
Indian Rupee 313
Mexican Peso 434
Russian Rouble 310
Australian Dollar 182
South Korean Won 299
* NB: The GGI is rebased for the top 10 currencies by economic output each year. The 13 gold-lagging currencies above all made one appearance (or more) in the last decade's data. 2009 positions given here, courtesy of the IMF. The US accounts for 32%, the Eurozone 27%.

Of course, no one much cares for the last 10 years of data, however - not outside the relative performance tables of mutual fund sales teams.

But whether you think gold warned of trouble ahead when it first doubled to the start of 2006...or you feel it merely worked-as-prescribed when it almost doubled again during the financial crisis that then followed...it's clear that the decade of gold just ended was a long way from a "Dollar down" story alone.

And all this without the much-fabled price inflation which newcomer pundits believe is essential for a long-term rise in the gold price. Just imagine what the price might do from here if a true surge in the cost of living now shows up worldwide.

 


 

Adrian Ash

Author: Adrian Ash

Adrian Ash
BullionVault.com

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the head of research at BullionVault, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

About BullionVault

BullionVault is the secure, low-cost gold and silver exchange for private investors. It enables you to buy and sell professional-grade bullion at live prices online, storing your physical property in market-accredited, non-bank vaults in London, New York and Zurich.

By February 2011, less than six years after launch, more than 21,000 people from 97 countries used BullionVault, owning well over 21 tonnes of physical gold (US$940m) and 140 tonnes of physical silver (US$129m) as their outright property. There is no minimum investment and users can deal as little as one gram at a time. Each user's unique holding is proven, each day, by the public reconciliation of client property with formal bullion-market bar lists.

BullionVault is a full member of professional trade body the London Bullion Market Association (LBMA). Its innovative online platform was recognized in 2009 by the UK's prestigious Queen's Awards for Enterprise. In June 2010, the gold industry's key market-development body the World Gold Council (www.gold.org) joined with the internet and technology fund Augmentum Capital, which is backed by the London listed Rothschild Investment Trust (RIT Capital Partners), in making an $18.8 million (£12.5m) investment in the business.

For more information, visit http://www.bullionvault.com

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Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events - and must be verified elsewhere - should you choose to act on it.

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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
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