InvestorQ : Will the BREXIT lead to the emergence of gold as an alternate currency?
Archita Jajjoo made post

Will the BREXIT lead to the emergence of gold as an alternate currency?

Answer
user profile image
vidhya Laxmi answered.
1 year ago


There are currently five hard currencies in the IMF SDR basket viz. US$, UK£, Euro, Japanese ¥ and the Chinese Yuan. The Yuan is a new entrant into the SDR basket. Of the remaining four, UK£ and the Euro will be under intense pressure due to an economic slowdown in both these regions due to BREXIT. We are already beginning to see investors trying to shift out of £ and € assets into Dollar and Yen assets. That will reduce the number of preferred hard currencies to just two. The irony is that both the US and Japanese central banks have been following an accommodative monetary stance. The BREXIT will mean that any prospects of a US Fed rate hike are put off for the time being. Under these circumstances all the leading currencies are likely to see value debasing due to loose monetary policies. The only currency that has the potential to hold value due to its finite supply is gold. Remember, investors like Stanley Druckenmiller are already touting gold as the next big currency.