A Sound and Credible Currency

By: Adrian Ash | Wed, Feb 23, 2011
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As a currency, the Euro doesn't have to do much to equal its peers...

"SILVER HITS new all-time highs in Euro" proclaimed Zero Hedge on Monday.

Regular readers of the blog site won't choke to know it was wrong, this time by only one third. Mistaking (and showing) a chart of month-end prices for a chart of daily silver prices, Zero Hedge's pseudonymous host, Tyler Durden, missed the true Euro-equivalent spike to €32.80 per ounce of 18 January 1980 - hit in what was then the Deutsche Mark the very same day that silver priced in Dollars also hit its all-time high to date...some 44% above this week's top.

Silver: Euros per Ounce

Still, the point is near-enough made. Because silver, like gold, isn't just about the Dollar, even though its latest surge coincides with the latest plunge in the US currency. Instead, silver has also caught a strong and growing bid over the last 5 years against the Dollar's upstart challenger too. And since the Euro debt crisis really got started 12 months ago, the silver price has scarcely looked back...rising 108% from the start of 2010.

"The Euro as a currency is not in crisis. The single currency is sound and credible," said European Central Bank president Jean-Claude Trichet in an interview with Paris newspaper L'Espresso earlier this month. Which, a little like Zero Hedge, is both premature and misleading. Because the Euro "as a currency" doesn't have to achieve very much to retain the same credibility as its modern-day competitors.

Against the older monetary measures of gold and silver, on the other hand, the Euro looks just as weak as the other three "big four" reserve currencies - the Dollar, Sterling and Yen.

 


 

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