Coordinated Currency Devaluation: Time to Buy Gold
Not to be outdone by Europe or the U.S., the Bank of Japan announced yesterday that it would print an additional 10 trillion yen ($128 billion) to expand the size of its asset-purchase program. The BOJ’s decision comes on the heels of the European Central Bank’s December decision to massively expand... Read the full story
Gold King as Currencies Debased
Yesterday the Bank of England announced another round of quantitative easing, this time spending $79.1 billion on government bonds. On the chart below you can see the effects previous rounds of quantitative easing have had on the price of gold in U.S. dollars and pounds sterling. As monetary authorities... Read the full story
What the Franc!
Julia Child made cooking look easy. The same cannot be said about U.S. Federal Reserve Chairman Ben Bernanke and monetary policy. He makes it look painful. On Thursday, the U.S. Federal Reserve decided it’s in everyone’s best interest, particularly that of French banks, to increase U.S. dollar liquidity... Read the full story
Gold Surges to Record High
Gold is up more than 6.5% since the first of the month. The precious metal is rallying on fears that the euro-area financial crisis may infect Italy and an indication from Chairman Bernanke that the Federal Reserve hasn’t ruled out another round of money printing. I’m not sure who believed that the... Read the full story
The World’s Most Profitable Currency
Can you guess which of the world’s currencies has appreciated the most this year? If you guessed the Paraguayan guarani, you’re right. A close second was the kina. Which country uses the kina? Why, Papua New Guinea, of course! If you would have trouble spotting either of these countries on a map,... Read the full story
Dow in Dollars and Gold
This week the Dow Jones Industrial Average surged to 12,700, about where it was three years ago. You’re back to even, right? Not really. Over the same period Gold has risen 68%. It’s true the Dow in dollar terms is about the same over the last three years but when comparing it to the Dow in terms... Read the full story
Dollar Crashes to Record Low
Scott Pelley: “You have what degree of confidence in your ability to control [inflation]?” Ben Bernanke: “100%” – 60 Minutes 12/5/2010 The U.S. dollar took another beating this week. The greenback fell 1% vis-à-vis the euro, 1.1% against the Swiss franc, and 1.7% against the Australian dollar.... Read the full story
The Fed vs. the ECB
I wouldn’t trade the U.S. dollar for the structurally flawed euro, at least not yet, but I would gladly trade Ben Bernanke for the more vigilant European Central Bank (ECB) President Jean-Claude Trichet. Take a look at the contrasting views on inflation in the statements below. It should be clear after... Read the full story
Is the Dollar Losing its Safe-Haven Status?
In times of geopolitical upheaval, investors traditionally flee to perceived safe-haven assets. Historically, the dollar has been considered a safe-haven. You can see this trend in my chart below. The chart compares the VIX Index (a.k.a the Fear Index), which is a measure of investor risk aversion in... Read the full story
Christmas Price Inflation
Inflation risks are greatly overstated, says Ben Bernanke. We should be worried about debilitating deflation, not inflation. Ben B., of course, focuses on core inflation as his guide to price stability. Core inflation excludes food and energy. So as long as you don’t mind starving in the freezing cold... Read the full story
