Global Investor: Gold King of the Currency Hill in the 21st Century
Sep 14th, 2009 | By Eric Roseman | Category: US Dollar & Forex TradingThe Swiss franc is still a good currency relative to the majority of paper trash still circulating in the world, but it isn’t quite the beacon of strength it once was…
Gold Slowly Gaining Ground on the Franc
Though it did play that role in the worst of the financial crisis starting in late 2007, the Swiss currency has failed to maintain its relative purchasing power vis-à-vis gold since 2001 (see gold in Swiss franc terms above).
Since late 2001 when the dollar peaked, the Swiss franc has gained a cumulative 36%. This compares to gold rising a cumulative 130% in Swiss franc terms or from 4.5 to 10.35 now. The Swiss franc has lagged behind gold this decade. That’s not a surprise. Since 2005, all currencies are trailing bullion as the yellow metal continues to rally. Gold hasn’t recorded a losing calendar year since this rally started almost nine years ago.
The Swiss franc is still a good currency – much better than its peers. But in this world of competitive devaluations and the slow death of the post-Breton Woods exchange rate mechanism, the franc is no longer a bastion of strength.
Today, that role has been replaced by gold.
Source: Global Investor: Gold King of the Currency Hill in the 21st Century
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