Gold vs. World Currencies 2014

Gold vs. World Currencies.

Gold Closes 2014 Higher Against All Major Currencies Except the U.S. Dollar.

Gold Closes 2014 Down Less Than 2% Against the Dollar After Spending Most of 2014 in the Black.

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Gold Doesn’t Perform, it Endures.

The price of gold ended slightly down against the United States dollar in 2014. Gold proponents pointed out that gold “performed” better in 2014 than all currencies other than the dollar.

But gold doesn’t perform, it endures. Gold’s price is measured in relative terms to the strengths and weakenesses of fiat currencies and the monetary and fiscal policies that support or debase them. Gold is neither dependent on prudent fiscal stewardship to preserve its value nor subject to reckless central bank debasement that could undermine its value.

Gold doesn’t default, threaten to default, change governments, debase, or stimulate. Gold conducts no monetary policy. Gold simply is. It stands at the center of fiat currency experiments, all of which have failed in the past to dethrone gold as the world’s most valuable and lasting currency.

Gold has outlasted all fiat currencies, from the Roman Empire to the Weimar Republic prompting Citibank’s Willem Buiter to call gold a 6,000 year old bubble in 2009 (he recycled his piece in 2014 to aid the anti Save our Swiss Gold initiative).

Gold vs. the United States Dollar and other Major Currencies in 2014

Gold was 2nd best enduring currency in 2014 and is the most enduring and valuable currency of all time.

During 2014 much of the main stream financial media bashed gold incessantly. The impression given might be that gold had a horrible year. Depite the negative media attention, and bullion bank dire price predictions, gold’s value vs. fiat currencies held up quite well (see charts below) as the global central banks’ race to debase continued with the U.S. Federal Reserve temporarily withdrawing from the race in late 2014 by ending QE3 and threatening to raise interest rates.

Gold finished slightly down against the United State Dollar in 2014 after finishing down 28% in 2013 and rising the twelve prior years.

Gold vs. the Dollar 2001-2014 chart

Gold rose twelve years in a row from 2001-2012.

Currencies vs. Gold or Gold vs. Currencies?

Peter Schiff President of Euro Pacific Capital and Schiff Gold notes that one should measure currencies in gold, not gold in currencies.

This is the correct view.

To illustrate the point, however, set forth below are charts measuring gold in currencies, rather than currencies in gold. In 2014, gold appreciated significantly against some currencies, notably vs. the Ukrainian Hryvnia, where gold was up 90%.

Urkrainians who held gold in 2014 instead of Hryvania didn’t “make” 90%, rather they avoided a loss brought on by the destruction of value of the Hryvania and maintained their wealth and purchasing power.

In Ukraine, gold didn’t perform, it endured.

Below are charts showing gold’s “performance” against the dollar and other major currencies.

Gold vs. the United States Dollar – down 1.8%

The dollar benefitted in 2014 from the end of QE, a supposed accelerating job and economic “recovery” and talk that the Fed would raise interest rates in 2015.

This dynamic was just enough to boost the dollar past gold in the final quarter of 2014. The dollar rose in the final months of 2014 as the Fed appeared to be the prudent central bank among the world’s central banks because it ended QE.

To create this view of the Fed as a prudent central bank, the financial markets needed to forget that QE3 capped off the largest multi-year, multi trillion dollar currency printing program ever conducted by any central bank, believe that the Fed would raise interest rates (something it hasn’t done in nearly a decade) and never do QE again (quittin’ QE is easy for the Fed, they’ve done it three times already).

The Fed has already proven its monetary profligacy and the United States Congress, with its $18 trillion budget deficit, has demonstrated that it is the Fed’s fiscal equivalent in financial dissapation. In light of a new more dovish Fed board in 2015, leading to more “patience” on a decision to raise interest rates, continued deficit spending and a flagging economy, expectations that dollar strength vs. gold will endure seem unlikely.

If a strong dollar were to prevail, however, the Fed would not like the deflationary impact that might have on their misguided efforts to create inflation and would talk action probably in the form of another round of QE to weaken the dollar.

gold vs. the US dollar 2014 chart

The U.S. dollar was up slightly vs. gold in 2014.

Gold vs. the Argentine Peso – up 31%

Argentina defaulted again on its bond obligations in 2014 and the peso suffered for it.

gold vs. argentine peso 2014 chart

Gold appreciated 31% against the Argentine peso in 2014.

Gold vs. the Australian Dollar – up 7.7%

The Australian dollar is commodities driven and as such lost ground to gold in 2014 as commodity prices slumped.

gold in australian dollars 2014 chart

Gold rose nearly 8% against the Australian dollar in 2014.

Gold vs. the British Pound – up 5%

The Bank of England has been engaged in its own quantitative easing program and has not yet unwound the £375 billion of UK gilts (bonds) it purchased. The result of its QE program have left the pound weaker vs gold.

Gold vs. the British Pound 2014 chart

Gold appreciated 5% vs the British Pound in 2014.

Gold vs. the Canadian Dollar – up 7.9%

The Canadian dollar is a commodity based currency that is closely linked to the price of oil. As the price of oil sharply fell in the second half of 2014, so did the Canadian dollar.

gold vs. canadian dollars 2014 chart

Gold rose nearly 8% against the Canadian in 2014.

Gold vs. the Chinese Renminbi – up 1.2%

Gold vs chinese renminbi 2014 chart

Gold was nearly unchanged vs. Chinese Renminbi in 2014.

Gold vs. the European Euro – up 12.1%

The Euro fell during 2014 against gold as uncertainty regarding the status of Greece’s position in the European Union and lack luster economic performance across most of the Euro zone, weighed on the Euro. Talk of a potential initial round of quantitative easing by the European Central Bank weakened the Euro further.

Gold vs. the euro 2014 chart

Gold was up 12% vs. the Euro in 2014

Gold vs. the Indian Rupee – up 1%

Gold was unchanged against the Indian Rupee in 2014. The Reserve Bank of India imposed harsh gold import restrictions in 2014 in an attempt to reduce its current account deficit.

Gold vs. the Indian Rupee 2014 chart

Gold was flat vs. the Indian Rupee in 2014.

Gold vs. the Japanese Yen – up 12.3%

The Japanese Yen lost significant value against gold and other currencies as the Bank of Japan continued its massive bond buying program and expanded it in late 2014, shortly after the U.S. Federal Reserve ended its QE program.

Gold vs the Japanese Yen 2014 chart

Gold gained more than 12% vs. the Japanese Yen in 2014.

Gold vs. the Russia Ruble – up 79%

Russia had a difficult 2014 as the west placed sanctions on it for its purported aggression in Crimea and Ukraine. Russia added over over 150 tons of gold to its reserves in 2014, but the impact of sanctions and a 50%+ drop in the price of oil took their toll on the Russian rouble.

Gold vs. the Russian Rouble 2014 chart

Gold rose nearly 80% vs. the Russian Rouble in 2014.

Gold vs. the Swiss Franc – up 9.9%

The Swiss Franc suffered a similar loss of value vs. gold as the Euro in 2014 because the Swiss National Bank (SNB) has committed to keep the Franc to Euro peg at 1.2 to 1. In order to achieve this the SNB has been buying Euros and debasing its currency. The Save Our Swiss Gold (SOSG) initiative that was voted down in November of 2014 would have restricted the SNB from further Swiss Franc debasement. After the SOSG initiative was rejected, the SNB announced a negative interest rate policy putting further pressure on the Franc vs. gold.

gold vs swiss franc 2014 chart

Gold was up about 10% vs. the Swiss Franc in 2014.

Gold vs. the Syrian Pound – up 28%

War potentially can harm a currency if it becomes possible that a change of leadership may result or that the sovereign may cease to exist. A civil war, like the one raging in Syria in 2014, had an adverse impact on the Syrian pound.

Gold vs. the Syrian Pound 2014 chart

Gold rose 28 % vs. the Syrian Pound in 2014.

Gold vs. the Ukraine Hryvnia – up 90%

Uncertainty over the future of war torn Ukraine caused a significant drop in the value of the Ukrainian Hryvnia vs. gold in 2014.

Gold vs Ukraine Hryvnia 2014 chart

Gold nearly doubled vs. the Ukraine Hryvnia in 2014.

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All charts courtesy of Nick Laird of Sharelynx, the Gold Standard in Precious Metals Charts

Further Reading:

Gold Priced in World Currencies Second Quarter 2016
Gold Price in World Currencies 1st Quarter 2016

Gold Price in World Currencies 2015

Gold Price in World Currencies Third Quarter 2015

Gold Price in World Currencies Second Quarter 2015

Gold Price in World Currencies First Quarter 2015

Gold is an Asset, Not an Investment

Gold Supply and Demand

The Importance of Gold

China and Gold

Russia and Gold

India and Gold

Gold vs. the Dollar

Bitcoin Gold or Silver: Which is the Best Store of Value?

Gold and Silver Manipulation – Suspected

Silver and Gold Manipulation – Actual

Gold News From Around the World

Gold Reserves By Country

Royal Canadian Mint

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