Now, as far as gold goes... if it becomes traded more widely by countries, using it for currency as a bridge to this new currency basket, rather than the dollar, won't that work to actually lower/stabilize the value of gold rather than make it skyrocket??
Now of course gold may skyrocket against the dollar... but that's only because the dollar would fall through the floor... no? In which case you could also argue that investing in Yen or Reals or Aussie dollars or whatever would be just as wise as investing in gold. Basically anything other than the dollar or Euro. And I would think anything that is most easily convertible to usable currency would be the way to go... which to me is not gold.
During the G20 summit there was an emphasis on stable currency relationships, countries don’t like rapid moves in either direction as this would destabilize their import/export trading and domestic prices. The same seems to apply to gold, a steep increase would signal instability and weakness of major currencies, like the Dollar or Euro, and would reduce its use for jewelry (India) and other applications.
If you believe in the demise of the US dollar than alternative currencies such as the Yen, Real, Aussie and Canadian dollar would be good investments as well as their commodities, and probably bring better returns than gold. My gold stocks have underperformed compared to copper and other investments this year.
I anticipate only gradual growth in the price of gold due to the political interference, unless rapid inflation breaks the controls.
Even in times of international crisis the markets seem to revert to the dollar rather than gold. Nevertheless, I will keep some gold stocks, just in case….
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