Monday, Mar 04, 2013

Game Changing collapse of GBP vs USD

Yahoo Finance: USD to GBP Chart

Well, check out the chart above, and you will see that the recent drop in Sterling looks like a break out from the more stable pattern that has characterized Sterling's stability against the USD to circa 1.55 USD to the pound since its COLLAPSE in 2008 from 2-USD to the pound to 1.4. Looks like our trade surplus with America and the rest of the world is about to increase and maybe our deficit with the EU is about ti reduce, but hold your hat for significant internal inflation and a sudden drop in Sterling. This correction is the medicine, but remember that loose monetary policy made it necessary in the first place. Got gold?

Posted by libertas @ 06:45 AM (1069 views) Add Comment

7 Comments

1. khards said...

I for one can only hope that the value of the pound collapses for a couple of reasons:

1, Vested interests.
2, Interest rates will have to rise causing house prices to collapse.

I think that rates will only be rigged higher once banks are in a good capital position to absorb losses. I am not sure where the banks are in relation to that?

Monday, March 4, 2013 07:55AM Report Comment
 

2. tick tock said...

Libertas,

Given that Central Banks hold more gold than you & have an obvious VI in its $ price of it, why do you believe that the gold price is 'free' to go where it wants? One of the best ways to overstate the real value of funny money is surely to 'manage' the price of gold. Therefore, given that the Fed has a mandate to do this (in 'defense' of the dollar...snigger snigger), a fairly obvious incentive to do this, and various mechanisms by which they can achieve this by stealth, why such faith in a fair pricing for gold?

Monday, March 4, 2013 06:48PM Report Comment
 

3. Stuartking said...

I wouldn't panic too much about the value of the pound versus the dollar - time frames are everything. In 1980, the pound bought just US$1.05.On that basis, it's almost 50 per cent higher now. In 2007, the pound hit a modern high at $2.11.

The Economist's "Big Mac Index' suggests the US$ is currently about three per cent overvalued against the pound and the Euro about 15 per cent

Monday, March 4, 2013 08:20PM Report Comment
 

4. stuartking said...

I wouldn't panic too much about the value of the pound versus the dollar - time frames are everything. In 1980, the pound bought just US$1.05.On that basis, it's almost 50 per cent higher now. In 2007, the pound hit a modern high at $2.11.

The Economist's "Big Mac Index' suggests the US$ is currently about three per cent overvalued against the pound and the Euro about 15 per cent

Monday, March 4, 2013 08:21PM Report Comment
 

5. nod2glod said...

@2, governments draw their power from the control of people and the extraction of their labour through the fiat money system. Gold is a direct competitor to fiat money systems. If the price of gold rises too much then there is a risk people will start to save in gold and transact in gold rather than fiat money. This is why many developing countries with historic poor economic management have a strong infinity to gold and silver. Therefore government surpress the price of gold.

If you are actually interested, do some research, there is masses to information on the how and why of this.

ps, private ownership of gold dwarves centeral bank ownership. It's estimated the indian people have over 20,000 tonnes in private ownership.

Monday, March 4, 2013 08:32PM Report Comment
 

6. libertas said...

Tick Tock. I never said that the gold price is fair. All I know is that over the next decade, it will yield more than my bank account with no capital gains tax.

Monday, March 4, 2013 09:20PM Report Comment
 

7. This comment has been removed as it was found to be in breach of our Blog Policies.

 

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