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And how do you think the U.S., with its rising national debt, fits into this picture? What impact does this have on gold, inflation in Europe, and the euro?
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This highlights the underlying structural weakness of the eurozone. It stems in particular from the lack of a common fiscal policy and the widespread disregard for the Maastricht criteria, which have so far proven largely nonbinding. This suggests that another euro crisis could be only a matter of time. The trend in CDS spreads on French government bonds indicates that it could occur sooner rather than later.
The U.S. faces some similar challenges but benefits from having established the U.S. dollar as the world’s reserve currency. While this status is gradually eroding—which, consequently, supports demand for non-government stores of value such as gold and Bitcoin— China’s recent gold purchases are a clear example of this trend.
Should the euro come under pressure again—and setting aside Japan, where the situation is arguably even more difficult—neither the U.S. dollar nor the yen would necessarily be a compelling alternative. This could further increase demand for gold and Bitcoin as alternative stores of value.
The U.S. faces some similar challenges but benefits from having established the U.S. dollar as the world’s reserve currency. While this status is gradually eroding—which, consequently, supports demand for non-government stores of value such as gold and Bitcoin— China’s recent gold purchases are a clear example of this trend.
Should the euro come under pressure again—and setting aside Japan, where the situation is arguably even more difficult—neither the U.S. dollar nor the yen would necessarily be a compelling alternative. This could further increase demand for gold and Bitcoin as alternative stores of value.
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