Watching the NOK

The gold price measured in euros or dollars has been hammered lately. People are desperate for these reserve currencies in their rush to pay down debt and finance emergency measures, so they are willing to sell anything, including gold, in order to get hold on the required cash.

However, this situation is unlikely to persist for long. Both the EU and US are announcing rescue packages of various kinds. Central banks are about to flood the world with liquidity. What will happen next is likely to be what we're currently seeing in the Norwegian Krone (NOK).

The Norwegian government has announced all sorts of rescue packages. With a giant sovereign wealth fund to draw on, it figured itself well positioned for this. However, the effect on the NOK has been catastrophic. After a long and slow slide, the NOK fell off a cliff this week. A 20% fall in a matter of days has seen the gold price reach an all time high when measured in NOK.

As a gold owner, watching the NOK collapse like this has given me a great boost in confidence. We may momentarily be a little down relative to euros and dollars, but relative to the NOK we're doing just fine. Relative to the stock markets, we're also up by quite a lot, and we will most certainly be up in euros and dollars in the near to medium term future.

By OSJ99 - Own work, CC BY-SA 4.0, Link