Gold: the best defence in a genuine currency war

19-Aug (MoneyWeek) — Every investment needs a good story if it’s going to fly.

“The internet is going to change the world”, drove the dotcom bubble. “They’re not building any more land,” drove buy-to-let. “The Chinese want the things we take for granted – and there are just so many of them,” drove commodities.

…The big financial story of last week was China’s repeated devaluation of the yuan. In just about every related article – and in many of the headlines – the phrase ‘currency wars’ has appeared. It’s all over the papers, TV and the internet. It’s even in the title above.

Of course, currency wars are nothing new. They’ve been around for as long as governments have issued money. Even the clipping of coins by Roman emperors is a sort of currency war, in that it was a devaluation of money.

But the competitive devaluation of money is more of a 20th and 21st century, government-organising-the-economy thing – and it has become more and more common as trade has grown more international.

…And as Marc Faber says, gold is the best way to short central banks.

…However, in ‘currency wars’ a new narrative is manifesting itself. And that is gold-positive.

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