Currency War Has Started!

No declaration, no firing, and no physical fighting, but a war has already started, believe or not! It is a Currency War across the world. We are now at the stage of a full-blown currency war, very similar to the situation in 1931 when the UK broke itself from the gold standard in September. Within months, the UK pound depreciated by 30% against the US$. Not surprisingly,  this triggered a chain reaction from the United States, France, Germany, Sweden, Norway etc, to take similar actions. There is no winner in such a war. We know what happened in 1930s, a Great Depression followed.

I'm afraid the world is taking the same path now. Every country wants to have a cheaper currency and is at the full capacity with its printing machine to create money from the thin air. Of course, no one will acknowledge this and ironically they will even declare that they want to have a strong currency. But look at the chart below, comparing the major currencies (US$, Euro, J-Yen, A$, CAD$, and Sfr) against the only real money, gold (the top blue line). All the currencies have been worth much less than gold in the past 5 years, i.e. losing their real value over time. People used to think Swiss Franc was a strong currency but nowadays, even Swiss government cannot help but join the currency war. They have now tied the Swiss Franc to Euro. The latest action of the Japanese government to print unlimited Yen in order to push up its inflation to 2% is probably the final straw on the camel back. I think there is no way back. The paper currency system will eventually collapse.  Who will be the final winner? No one among any paper currencies but the real money, gold as well as silver and platinum!