Wednesday, 2 April 2008

The Flagging Pound

The article about the Chinese shunning the flagging dollar is interesting, but are you aware that the pound is also suffering at the moment and not a word is being said about it except in financial circles.

A year ago I was getting around 1.47 euros to the pound. By September this had dropped to around 1.40 to the pound. Checking xe.com today I see that the price for euros is in the region of 1.26. This is a drop of around 20 cents in a year.

This situation is compounded by the dollar rate. There is much talk about the dollar falling against the Euro, but the pound to dollar ratio has not changed anywhere near as dramatically. What this means is that the pound has been falling roughly in line with the dollar.

Recently this has also changed. The pound is now falling against the dollar as well. Last year the pound peaked against the dollar at around 2.04. According to xe.com the rate is now about 1.97. As the dollar is clearly not gaining in value, this must mean that it is the pound that is falling – and falling significantly faster than the dollar.

All this raises a very simple question in my mind – What the hell is going on?

As for the article about gold and silver. If the gold is not at Fort Knox and it is not in the Bank of England, where the hell is it?

A final thought: why do people assume that gold and silver have any more intrinsic value than paper money?

Source: Thetruthseeker.co.uk

4 comments:

Johann said...

Gold/silver has more value because it is immune against inflation which reduces the value of paper money. If all paper money becomes worthless you will still be able to trade and buy goods with gold and silver as it has intrinsic value.

Guhn said...

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Richard Lalancette said...

Philip, thanks for bringing this up.

It's the first time I see a link between the pound and the US$ drop...

How is that explained?

Philip said...

Richard, I think the stark link between the pound and the US dollar is everything is traded almost as a mirror image of each country. If the US markets open up the UK markets also climb about 1pm (the time of the US market opening here in the UK) and vice versa. Therefore, I think the pound just follows suit everything is so closely linked.
In another note I believe 'they' are driving the pound lower (just like the dollar) in order to bring the Euro to the UK and the Amero to the US.