Which Currency will Win the current Currency War?

Dear PGM CAPITAL Blog readers,
We are living in exceptional times and are now experiencing the fall of the once so mighty Western Nations (United States of America, Europe & Japan).

Previously the shift of Economic Power caused a big war or was the consequence of big war.

Nothing has changed. Currently the fall of the West is causing the biggest war ever seen on this planet, with the difference that the ammunition for this war isn’t bullets and bombs, but currencies.

The West is currently deeply in debt of which the debt of the USA and Japan is above 100% of their GDP. The other big industrial nations like United Kingdom, Germany and France all have a Debt to GDP of 80% or higher.

With an aging population and increasing interest payment, chances are that these debts cannot be repaid and can only be diluted via money printing and maintaining interest rates artificially low. These measures will stimulate inflation and will consequently have a positive effect on their GDP and will subsequently artificially lower their Debt to GDP.

This means that the indebted countries are now in a race for which one can dilute its currency more, with the consequence that the world is now in a race to the bottom, because countries with strong currencies will be forced to either join this race or to peg their currency to a big (reserve) currency currently in the race to the bottom, in order to protect their export.

A consequence of the above is a Global Currency war. The question most people will ask themselves is: if this is true, which currency will win this war?

The country /currency that will win this war is the one that is able to dilute its currency more. In other words the country that is able to create the most inflation will be the one winning the current global currency war. Inflation acts as a hidden tax on the population. This means that in the current currency war, governments, in order to win the war, must shoot on their own population, which isn’t a pretty picture.

During wars people run to shelters for safety when the bomb alarm goes off. In this global currency war we must do the same by exchanging our FIAT Currencies for Gold, Silver, other precious metals and commodities, which cannot be printed or diluted by politicians and central bankers.

The problem with the above is that the supply of these precious metals and commodities is limited and when the panic hits and every body is running to the shelters, the prices of these commodities will shoot through the roof.

The consequence of this will be that at the end of the currency war, the world will be divided into those who own Gold, precious metals and commodities and those who don’t.

Last be but not least, before following any investing advice, always take your investment horizon and risk tolerance into consideration and keep in mind that the price of Commodities as well as the stocks of their producers can be very volatile and that sharp corrections might happen in the short term.

Yours sincerely

Eric Panneflek
Chairman