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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Welcome back to the Worldwide Fiat Currency Race to Debase!

Currencies / Fiat Currency Oct 05, 2010 - 04:56 AM GMT

By: GoldCore

Currencies

Best Financial Markets Analysis ArticleAt the close of third quarter 2010, it is clear for the world to see that all fiat currencies around the globe have been getting their paperback-sides kicked in by true hard monies, silver and gold.

To all the paper-bug fiat currency fools out there, we have this to say to you. Scoreboard.


RACE TO DEBASE


Year 2010

GOLD vs. Fiat Currency

+ 19.9%

       

Quarter 3

SILVER vs. Fiat Currency

+ 29.8%

Fiat money has no place to go but gold. If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it.

- Alan Greenspan

Many people, like the aforementioned bubble maestro Alan Greenspan, mistakenly refer to fiat currency as fiat money. In order for a currency to also be money it must by definition be a store of value over a long period of time.  Only two currencies are money, gold and silver.

Lets delve further into the numbers.

Here is a look at how real monies, gold and silver, have performed against 74 various fiat paper currencies thus far in 2010.



Fiat Currency vs. One Gold Ounce 1-Jan-10 30-Sep-10 % Gold Gain
Afghanistan Afghanis 53,343 57,162 7.2%
Albania Leke 104,997 132,216 25.9%
Algeria Dinars 78,965 95,891 21.4%
Argentina Pesos 4,171 5,161 23.7%
Australia Dollars 1,223 1,352 10.5%
Bahamas Dollars 1,097 1,303 18.8%
Bahrain Dinars 414 491 18.7%
Bangladesh Taka 75,662 90,340 19.4%
Barbados Dollars 2,195 2,606 18.7%
Bermuda Dollars 1,097 1,303 18.8%
Brazil Reais 1,914 2,212 15.6%
Bulgaria Leva 1,497 1,874 25.2%
CFA BCEAO Francs 502,190 628,614 25.2%
CFA BEAC Francs 502,190 628,614 25.2%
Canada Dollars 1,154 1,342 16.3%
Chile Pesos 556,850 631,042 13.3%
China Yuan Renminbi 7,493 8,722 16.4%
Colombia Pesos 2,244,898 2,347,464 4.6%
Comptoirs Français Francs 91,358 114,358 25.2%

Fiat Currency vs. One Gold Ounce
1-Jan-10 30-Sep-10 % Gold Gain
Costa Rica Colones 618,358 652,479 5.5%
Croatia Kuna 5,594 7,001 25.1%
Czech Republic Koruny 20,134 23,558 17.0%
Denmark Kroner 5,701 7,142 25.3%
Dominican Republic Pesos 39,642 47,760 20.5%
East Caribbean Dollars 2,853 3,499 22.6%
Egypt Pounds 6,018 7,420 23.3%
Estonia Krooni 11,979 14,994 25.2%
Euro 766 958 25.1%
Fiji Dollars 2,116 2,459 16.2%
Hong Kong Dollars 8,509 10,113 18.8%
Hungary Forint 207,032 265,249 28.1%
IMF Special Drawing Rights 700 837 19.6%
Iceland Kronur 136,181 147,371 8.2%
India Rupees 51,147 58,608 14.6%
Indonesia Rupiahs 10,315,100 11,630,461 12.8%
Iran Rials 10,869,251 13,347,991 22.8%
Iraq Dinars 1,265,793 1,524,275 20.4%
Israel New Shekels 4,136 4,754 14.9%
Jamaica Dollars 98,024 112,069 14.3%

Fiat Currency vs. One Gold Ounce
1-Jan-10 30-Sep-10 % Gold Gain
Japan Yen 102,084 108,834 6.6%
Jordan Dinars 779 925 18.7%
Kenya Shillings 83,234 105,293 26.5%
Kuwait Dinars 315 371 17.9%
Lebanon Pounds 1,650,963 1,967,079 19.1%
Malaysia Ringgits 3,758 4,025 7.1%
Mauritius Rupees 33,812 39,224 16.0%
Mexico Pesos 14,371 16,459 14.5%
Morocco Dirhams 8,666 10,744 24.0%
New Zealand Dollars 1,512 1,779 17.6%
Norway Kroner 6,332 7,685 21.4%
Oman Rials 423 502 18.6%
Pakistan Rupees 92,518 112,539 21.6%
Peru Nuevos Soles 3,168 3,635 14.7%
Philippines Pesos 50,741 57,240 12.8%
Poland Zlotych 3,128 3,808 21.7%
Qatar Riyals 3,997 4,744 18.7%
Romania New Lei 3,227 4,091 26.8%
Russia Rubles 33,265 39,881 19.9%

Fiat Currency vs. One Gold Ounce
1-Jan-10 30-Sep-10 % Gold Gain
Saudi Arabia Riyals 4,116 4,887 18.7%
Singapore Dollars 1,542 1,715 11.3%
South Africa Rand 8,108 9,121 12.5%
South Korea Won 1,277,096 1,486,002 16.4%
Sri Lanka Rupees 125,504 145,586 16.0%
Sudan Pounds 2,452 3,092 26.1%
Sweden Kronor 7,848 8,819 12.4%
Switzerland Francs 1,137 1,278 12.4%
Taiwan New Dollars 35,063 40,755 16.2%
Thailand Baht 36,597 39,531 8.0%
Trinidad and Tobago Dollars 6,949 8,301 19.5%
Tunisia Dinars 1,453 1,851 27.4%
Turkey Lira 1,646 1,891 14.9%
United Arab Emirates Dirhams 4,030 4,787 18.8%
United Kingdom Pounds 679 828 22.0%
United States Dollars 1,097 1,303 18.8%
Venezuela Bolivares Fuertes 2,359 5,603 137.5%
Vietnam Dong 20,278,046 25,352,451 25.0%
Zambia Kwacha 5,092,801 6,317,655 24.1%


Why do central banks and governments around the world continue to overprint and weaken the values of their respective fiat currencies?

Countries need to export their products and trade. By having a weaker currency, a country can more easily sell and trade their products throughout the world.

The quandary is not every country can have a weak currency at the same time. Remember, fiat currencies trade in relative terms. Paper currencies are simply valued against one another therefore dollars are always priced in euros, yen, pesos, pounds, and so on. If one fiat currency weakens, one or more of the other fiat currencies strengthens.

When nations battle to faster debasement of their respective currency in the hope to bolster export demand (to perhaps maintain an economic status quo) this is what is called competitive debasement. In the 1930’s the term for this was "beggar thy neighbor."

Wall Street Journal - 9/24/2010

Beggar-thy-neighbor currency devaluations proved ruinous for the global economy in the 1930s. Is the world setting off down the same slippery slope again?

Japan's decision to intervene in the currency market to drive down the value of the yen blew a hole in the developed world's united effort to persuade China and other Asian countries to stop artificially holding down their currencies. Meanwhile, speculation that the U.S. and U.K. could soon resume quantitative easing has hit the value of the dollar and sterling.

Longer term, the biggest gainer is likely to be gold, already pushed to nearly $1,300 an ounce this week, the traditional refuge of those unwilling to put their faith in politicians.


Is the biggest gainer likely to be gold?  What about silver?


Base Currency vs. One Silver Ounce
1-Jan-10 30-Sep-10 % Silver Gain
Afghanistan Afghanis 821 952 16.0%
Albania Leke 1,616 2,203 36.3%
Algeria Dinars 1,215 1,598 31.5%
Argentina Pesos 64 86 34.0%
Australia Dollars 19 23 19.7%
Bahamas Dollars 17 22 28.6%
Bahrain Dinars 6 8 28.5%
Bangladesh Taka 1,165 1,505 29.3%
Barbados Dollars 34 43 28.6%
Bermuda Dollars 17 22 28.6%
Brazil Reais 29 37 25.1%
Bulgaria Leva 23 31 35.5%
CFA BCEAO Francs 7,730 10,474 35.5%
CFA BEAC Francs 7,730 10,474 35.5%
Canada Dollars 18 22 25.8%
Chile Pesos 8,571 10,515 22.7%
China Yuan Renminbi 115 145 26.0%
Colombia Pesos 34,553 39,115 13.2%
Comptoirs Français Francs 1,406 1,906 35.5%

Base Currency vs. One Silver Ounce
1-Jan-10 30-Sep-10 % Silver Gain
Costa Rica Colones 9,518 10,872 14.2%
Croatia Kuna 86 117 35.5%
Czech Republic Koruny 310 393 26.7%
Denmark Kroner 88 119 35.6%
Dominican Republic Pesos 610 796 30.4%
East Caribbean Dollars 44 58 32.8%
Egypt Pounds 93 124 33.5%
Estonia Krooni 184 250 35.5%
Euro 12 16 35.6%
Fiji Dollars 33 41 25.8%
Hong Kong Dollars 131 169 28.7%
Hungary Forint 3,187 4,420 38.7%
IMF Special Drawing Rights 11 14 29.6%
Iceland Kronur 2,096 2,456 17.2%
India Rupees 787 977 24.1%
Indonesia Rupiahs 158,766 193,796 22.1%
Iran Rials 167,295 222,415 32.9%
Iraq Dinars 19,484 25,399 30.4%
Israel New Shekels 64 79 24.4%
Jamaica Dollars 1,509 1,867 23.8%

Base Currency vs. One Silver Ounce
1-Jan-10 30-Sep-10 % Silver Gain
Japan Yen 1,571 1,813 15.4%
Jordan Dinars 12 15 28.6%
Kenya Shillings 1,281 1,754 37.0%
Kuwait Dinars 5 6 27.6%
Lebanon Pounds 25,411 32,777 29.0%
Malaysia Ringgits 58 67 15.9%
Mauritius Rupees 520 654 25.6%
Mexico Pesos 221 274 24.0%
Morocco Dirhams 133 179 34.2%
New Zealand Dollars 23 30 27.4%
Norway Kroner 97 128 31.4%
Oman Rials 7 8 28.6%
Pakistan Rupees 1,424 1,875 31.7%
Peru Nuevos Soles 49 61 24.2%
Philippines Pesos 781 954 22.1%
Poland Zlotych 48 63 31.8%
Qatar Riyals 62 79 28.5%
Romania New Lei 50 68 37.2%
Russia Rubles 512 665 29.8%

Base Currency vs. One Silver Ounce
1-Jan-10 30-Sep-10 % Silver Gain
Saudi Arabia Riyals 63 81 28.5%
Singapore Dollars 24 29 20.5%
South Africa Rand 125 152 21.8%
South Korea Won 19,657 24,761 26.0%
Sri Lanka Rupees 1,932 2,426 25.6%
Sudan Pounds 38 52 36.5%
Sweden Kronor 121 147 21.7%
Switzerland Francs 17 21 21.8%
Taiwan New Dollars 540 679 25.8%
Thailand Baht 563 659 16.9%
Trinidad and Tobago Dollars 107 138 29.3%
Tunisia Dinars 22 31 37.9%
Turkey Lira 25 32 24.4%
United Arab Emirates Dirhams 62 80 28.6%
United Kingdom Pounds 10 14 32.1%
United States Dollars 17 22 28.6%
Venezuela Bolivares Fuertes 36 93 157.1%
Vietnam Dong 312,112 422,443 35.3%
Zambia Kwacha 78,386 105,270 34.3%


We're in the midst of an international currency war. This threatens us because it takes away our competitiveness. Advanced countries are seeking to devalue their currencies.

- Guido Mantega, Brazil's finance minister

The competing currency war is ramping up, with gross interventions, open disputes, notable desperation, friction among trade partners, and urgent need to take action. Nations are taking positions against each other increasingly. In defending their economies, they are pitting themselves against allies and foes alike. The number of bilateral squabbles has never been greater. The winner will be Gold, as all paper currencies will circle the toilet and lose. The Gold price acts as a meter; it will rise in spectacular fashion. It rises due to the profound debasement in a death process of the currency system.

- Jim Willie CB, aka "The Golden Jackass"

Over the long haul, only money maintains its purchasing power. Gold and silver are money and they are destined to be the world champions of purchasing power.

The 74 different fiat paper currencies listed above are not money. They are poor stores of value for they don’t and won’t maintain their purchasing power over the longterm. We forecast that their worth will continue to fall, that their face values will simply purchase less and less as we continue to witness this ongoing worldwide race to debase.

Yes!  Physical silver and gold bullion coins and bars are for winners!

http://goldsilver.com

Mike Maloney is the owner and founder of GoldSilver.com, an online precious metals dealership that specializes in delivery of gold and silver to a customer's doorstep, arranges for special secured storage, or for placement in one's IRA account. Additionally, GoldSilver.com provides invaluable research and commentary for its clients, assisting them in their wealth building endeavors.

© 2010 Copyright  GoldSilver - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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