25 January 2010
In my last alert I presented two tables that showed the appreciation of
gold and silver against nine of the world's major currencies. A number of readers have asked me to provide these calculations for more currencies.
Most readers had the same objective. They wanted to know which of the various national currencies of the world ranks as the best one. In other words, they wanted to know which of them lost the least amount of purchasing power when using gold as the
numéraire.
Gold is an excellent 'measuring stick', but I also did the calculations for silver. The rates of appreciation of gold and silver in terms of 23 world currencies from 2000-to-2009 are presented in the tables below.
The best currency compared to gold is the Swiss franc, but even this venerable national currency lost 10.1% per annum on average for the past ten years.
The best currency compared to silver is a tie between the New Zealand dollar and Australian dollar. They lost 9.5% per annum on average for the past ten years.
So what really is the world's best currency in terms of preserving purchasing power? It is gold, and silver is a close second. When viewed in terms of the above tables, no national currency even comes close. This conclusion is also confirmed by the following chart which presents a base-100 analysis of crude oil prices against three national currencies and the precious metals.
Both gold and silver purchase essentially the same amount of crude oil they did at the beginning of this decade. In fact, an ounce of gold or silver purchases basically the same amount of crude oil that they did at any time during the past 60-year time span presented in the above chart. The precious metals have a proven track record of preserving purchasing power.
