Every once in awhile I will get someone who calls in and asks whether I think there will be a one world currency. They get this idea from listening to certain individuals that prey on the fears of people. Even noted perma-gold bull Jim Sinclair has said there is a one world currency coming. I say we already have two one world currencies in gold and secondarily silver. But at the same time, I believe the U.S. dollar, compared to all other currencies besides gold and silver, is today still the world’s currency.
Despite All the Negativity Surrounding It, The U.S. Dollar Is Still the Captain
The U.S. dollar is still the captain of the ship. Of course, it’s the captain on a ship that is taking on too much water and without any real Constitutional amendment constraining congressional spending, you don’t need a degree in mathematics to understand how much water the U.S. dollar ship is taking on. But compared to all other currencies, it is still viewed the bastion of stability for now.
The 75.61 figure last reached on 11/30/2010 would be the next low for the U.S. dollar to watch, and that’s a ways off from its current value of 77.13. It doesn’t mean it won’t test this level, but the March 30th low of 70.67 reached in 2008 is the point of no return for the U.S. dollar.
In reality, as seen in the 30 year chart of the U.S. Dollar Index below, the 80 trend line has been the key figure to watch. The U.S. Dollar Index has trended above and below this line for a number of years now. The truth is, just looking at the U.S. Dollar Index to view what one might call “value” for the U.S. Dollar is extremely misleading. It doesn’t give an investor the complete picture. It’s comparing one troubled currency, the U.S. dollar, with other troubled currencies , the Euro, Yen, Pound etc.
It’s like comparing scotch and whiskey to beer and wine. Too much of any of these spirits can have negative health and other potentially devastating results (like DUI, spousal abuse, child neglect etc.). Too much printing of the U.S. dollar, Euro, Pound or Yen has negative economic health results as well, along with a never ending decrease in purchasing power. Just like the alcoholic who continues drinking to the point of tolerating more drinks to keep the same level of buzz, the economies of these nations can only keep the buzz going as long as more spending by government continues.
One Must Compare Currencies To Gold, Not To Each Other
In an article I wrote for Seeking Alpha, a financial website, I pointed out Why Gold Is a Better Currency Indicator Than the U.S. Dollar Index. If one is comparing scotch to whiskey, both can give you a hangover if consumed in excess. In comparing say the Dollar to the Euro, both can be declining in purchasing power over time yet still have the same steady relationship to each other. This is how the average person is fooled into thinking one or the other holds value. They both give their respective economies hangovers from the printing by governments via their Central Banks various stimulus and quantitative easing packages they put upon the public.
What one needs to do is compare these currencies to gold. Gold is the only real asset that maintains its purchasing power over time. Gold is where people run to in times of turmoil, whether it be economic turmoil or revolutionary.
The following two charts paint the true picture as they compare the percentage increase in gold to the leading hard and soft currencies of the world.
What Do You Think Is The Real One World Currency?
The U.S. dollar has done a good job up to this point as being the one world currency. As other world economies deteriorate, many will still turn to the U.S. dollar as the last hope in maintaining some relevance of purchasing power. This is because many still believe the nonsense that the U.S. dollar is a “risk free asset.”
Some may think that the so called elitists will give us the IMF’s Special Drawing Rights (SDR’s) as the one world currency. Really? People will be convinced that just because the IMF says these SDR’s will be the new currency that all will use from the point of announcement on and by the wave of a wand, they will have magical purchasing power? This is complete and utter nonsense. Yes, it is true the IMF and others would love for you to believe in this type of currency being the savior of the world, but in truth, this is impossible. In the U.S., for example, they would have to somehow convince its citizens that the Constitutional definition of money is irrelevant. Oh…wait…they already did that though didn’t they when they gave us Federal Reserve Notes in 1913. And they took away the connection to gold in 1971. How have those Federal Reserve Notes done for you in America the last 40 years? How has the Federal Reserve Mandate of stable prices done for you in those years? And SDR’s are going to make things better? I mean really…
The people of Zimbabwe were struggling with hyperinflation and I wrote an article providing them with solutions. Instead of heeding my advice and turning to gold and shocking the world with the best monetary system, they did the next best thing and turned to the U.S. dollar as their currency. They didn’t choose the Euro, Yen or some basket of currencies.
Gold Is Clearly the Winner In Any One World Currency Speculation
There is only one real world currency, and that is clearly gold. Silver would be a close second, and I’m sure based on the last month and years performance, many would believe silver is better than gold. But not every country in the world views silver as money. It’s primarily the U.S., China (which was on the silver standard and not gold), Great Britain and a few other countries that used silver as money. Gold you will see is a much more stable currency as that is the asset held by central banks, and even the IMF. These were the fools that were selling all the while the price was moving higher. They’re not going to band together and convince you they know what they’re doing by giving the world a new form of currency. They don’t have the gold to back it. But you can still acquire gold yourself in preparing for what’s to come.
Please don’t get caught up in the reasons to own gold. Fear of a one world currency isn’t going to change things. No one will believe that by mandate some super organization like the IMF or United Nations has enough power to dictate monetary policy, especially to U.S. citizens who are backed by the second amendment. The reason to own gold is as insurance against the spending by the government and quantitative easing and bailouts by the lender of last resort, the Federal Reserve. This insurance is like no other. This is because gold outlasts all paper currency and always will in the long term as a means of maintaining purchasing power.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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